Tuesday, June 29th, 2010 at
11:16 pm
A broker acts as an intermediary who sources loans on behalf of individuals or businesses.
Traditionally, banks and other lending institutions have distributed their own products. However as markets for mortgages have become more competitive, the role of the broker has become more popular. Today in most developed markets brokers are the largest distributors of mortgage products for lenders.
Banks’ activities can be divided into retail banking, dealing directly with individuals and small businesses; business banking, providing services to mid-market business; corporate banking, directed at large business entities; private banking, providing wealth management services to High Net Worth Individuals and families; and investment banking, relating to activities on the financial markets. Most banks are profit-making, private enterprises. However, some are owned by government, or are non-profits. Central banks are normally government owned banks, often charged with quasi-regulatory responsibilities, e.g. supervising commercial banks, or controlling the cash interest rate. They generally provide liquidity to the banking system and act as Lender of last resort in event of a crisis.
The nature and scope of a broker’s activities varies with jurisdiction. For example in the UK anyone offering brokerage is offering a regulated financial activity; the broker is responsible for ensuring the advice is appropriate for the borrowers’ circumstances and is held financially liable if the advice is later shown to be defective. In other jurisdictions the transaction undertaken by the broker may be limited to pointing the borrower in the direction of an appropriate lender and no advice given.
Therefore the work undertaken by the broker will depend on the depth of their service and liabilities. Typically the following tasks are undertaken:
Marketing to attract clients
Assessment of the borrowers circumstances (Mortgage fact find forms interview). This may include assessment of credit history (normally obtained via a credit report) and affordability (verified by income documentation).
Assessing the market to find a mortgage product that fits the clients needs. (Mortgage presentation/recommendations)
Applying for a lenders agreement in principle
Gathering all needed documents (paystubs/payslips, bank statements, etc.)
Completing a lender application form.
Explaining the legal disclosures.
Submitting all material to the lender.
A broker works as a conduit between the buyer and the lender, the loan officer typically works directly for the lender. Most states require the broker to be licensed. States regulate lending practice and licensing, but the rules vary. Most have a license for those who wish to be a “Broker Associate”, a “Brokerage Business”, and a “Direct Lender”.
A broker is normally registered with the state, and personally liable (punishable by revocation or prison) for fraud for the life of a loan. A loan officer works under the umbrella license of their current institution. Both positions have legal, moral, and professional responsibilities as well as liabilities to prevent fraud and fully disclose loan terms to both consumer and lender.
Typically, a broker will make more money per loan than a loan officer, but a loan officer can utilize the referral network available from the lending institution to sell more loans. There are mortgage brokers and loan officers at all levels of experience.
By: Tarun Jaswani
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Friday, June 18th, 2010 at
2:17 am
Mortgage Refinance has created a surge in the financial lending sector, creating a somewhat unexpected but welcome spike in business during the lending’s struggling economic times. Rates have dropped below 6% as soon as the Federal Reserve mentioned they were going to buy mortgage-backed securities to stimulate consumer financing once again. The dramatic drop in mortgage rates has had a direct influence over mortgage finance and has proven some lenders under-prepared.
The purchase of mortgage-backed securities has started taking place as of the second week in January of 2009. This has spurred a wave of activity for the mortgage finance business, also adding to the workload lenders are currently experiencing after the Fed’s announcement in November of 2008.
Some contacting lenders for mortgage refinance have been unsuccessful in speaking to anyone directly. And with some left only with the option of leaving a message for a return call, this has frustrated consumers even more as they are unable to simply leave a message as lender mailboxes and voicemail are unable to support the volume of callers.
Other department employees experienced in finance within the lending institutions have been temporarily transplanted to handle the increasing mortgage refinance applications. The anticipation of rates climbing and back to their previous position has created a sense of urgency in people looking to refinance. It is possible to see change from hour to hour after tracking the history of rates over the past years so the concern is understandable.
Some consumers have been told it could be weeks before lenders can follow up about mortgage refinance. In this situation, take the time to contact several lenders as it may take more effort than usual to get through and actually get a response. This is a good time to benefit from knowing someone in the lending Industry.
If there are contacts directly related to the lending industry or connections with a real estate agent that can act as a liaison to help deal with a mortgage refinance, this will offer a stronger start. There is also the possibility some lenders may not have the time reply to the message or to an online application before some are able to lock in a great rate.
As the refinance business continues to see growth, it would be wise to seek out a lender that will be able to process the application right away and not have get through other applications while you wait for a couple of weeks before they can get to it. Some customers are told to fill out the form or application on the lender’s website for a mortgage refinance.
It would be wise to know the most current rate available, as some online lending sites purposely do not post the their rates just in case they should change. If it is obvious that going through the trouble of getting to a live person is not getting anywhere, take a different approach as soon as possible.
By: Madeline Hernandez
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Wednesday, June 16th, 2010 at
3:28 am
Buying a house is one of the biggest decisions a person can make, there are so many things that need to be considered. Probably the most important aspect of buying a house is getting a mortgages. A mortgage is a loan from either a bank or other financial institution that is large enough for you to buy your own house.
There are various ways of finding out information about mortgages and a person looking to apply for a mortgage needs to find out as much as possible about the process. First of all you will need to find out how much you can reasonably expect to borrow, and in order to do this you must contact mortgage lenders who will assess your financial situation.
Where do I find out more about mortgages?
There are several ways of finding out about which lenders are right for you. One way is to use the Internet and perform a search. Typing mortgages into your chosen search engine will bring up a list of lenders who all have websites. From this list you can browse the various lenders and find out more about the mortgages they have to offer. Many lenders websites even have a ready reckoner which you can use to input your financial details to see roughly what kind of size mortgage you will be able to obtain. It is worth noting however that these are not a mortgage offer and before any lender will enter into an agreement with you they will need to perform credit and various other checks in order to gain a full picture of your creditworthiness. If you then find a mortgage that seems to be right for you the next thing to do is to contact the lender directly and speak to someone.
What if I don’t want to use the Internet to search for mortgages?
If you don’t want to use the Internet for your search, don’t worry, there are other ways of getting a mortgage without turning a computer on. You can visit a mortgage broker who will look through the various mortgages that are available to you and help you come to a decision. This is good if you prefer to talk things through with someone face to face and have the time to spend going to appointments with your broker. Such services however are not free and many brokers will charge a one off setting up fee for your mortgage, this can be added to the mortgage in some cases.
Perhaps a broker isn’t ideal for you either, in that case you can spend time telephoning various banks and building societies and speaking to them about their mortgages. This is a very time consuming process and you need to be aware that all banks and building societies will try to convince you that their mortgage is the best one for you. If you decide to look for a mortgage this way be prepared to say no if you are not happy with the information you receive.
Why are there so many different types of mortgages?
The reason that there are many kinds of mortgage is that there are many kinds of financial situations and incomes that people will have. Some people will prefer to have an interest only mortgage on which they will only pay the interest but monthly payments will be lower than a repayment mortgage . There are also different interest rates attached to mortgages and these can vary depending on your credit score. A high credit score will, like with loans, result in a lower interest rate, and vice versa for a low score. However the only way to find out what kind of mortgage is right for you is to do your homework and make sure that you know all about mortgages before you sign on the dotted line.
By: Jason Jones
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