Mortgage Banker or Broker?

By
Mortgage and Lending with Zenith Mortgage Advisors (Milford,MA)

Have you ever wondered the difference between financing from a Banker or a Broker? Many Consumers falsely assume that there is little to no difference between the two. Lets start with a Mortgage banker.

Mortgage Bankers:

A Mortgage Banker is a direct lender who loans their own money, more often than not, with the intent to sell your loan to the secondary market. Some Banks retain the right to service the loan, which leads to the perception that they still own your loan. A mortgage banker will present you with only that lender's program of mortgages, so you need to speak with several mortgage bankers to find all of the loan programs and the one that best fits your needs. When choosing a Mortgage Banker, keep in mind that there say is final. If their Bank decides, during the loan process, to not lend you money, then you will need to start your search for another Bank. A denial from one Bank does not necessarily mean a denial from all Banks.

Mortgage Broker

A Mortgage Broker is best described as a middleman. They do not lend their own money, their primary role is to connect the borrower with a lender. Unlike Bankers, Brokers are able to choose from many sources and are able to offer many different loan programs. Many of the lenders a Broker works with are not available to the public. These lenders are called Wholesale Lenders. Wholesale lenders allow Brokers to be competitive in the marketplace. This flexibility to work with many differnent lenders and programs makes it easy for a Broker to transition your loan from one lender to another should any hurdles be encountered.

Licensing:Current guidelines, (SAFE Act), require all Mortgage Brokers to be licensed.

The SAFE Act was designed to enhance consumer protection and reduce fraud by requiring states to establish national minimum standards for mortgage training, including pre-licensing and annual continuing education. Furthermore, under the SAFE Act, all Mortgage Loan Originators (MLO) or Brokers must be either state-licensed or federally registered. All MLO's are required to pass the SAFE MLO Test.  Currently, there are no licensing guidelines for Mortgage Bankers.  

 

 

 

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