What Is A Home Mortgage Broker

Home Mortgage brokers are private entities that exist to match potential home buyers with banks. Mortgage brokers differ from loan officers in that the loan officer usually works for the retail banking side of the institution or bank. Mortgage brokers must be licensed through the states. Rules for this licensing vary by state.

Mortgage brokers must also be licensed through the Nationwide Mortgage Licensing System and Registry or NMLS. The purpose for the NMLS is to improve the process of mortgage lending and to increase communication from state to state. They also help to create consistency in regulations and automate the licensing process. While not required to be licensed through the NMLS, loan officers must register with the NMLS/

A study done in 2004 showed that 68% of all home mortgage loans originated through home mortgage brokers. The remaining 32% were handled through the banks directly.

Banks sometimes outsource to mortgage brokers to bring in qualified applicants and to remove some of the risk of fraud. Mortgage brokers generally will do their own advertising for new clients and are responsible should fraud be involved in a loan application.

A large segment of the mortgage and finance industry is commission based. This means, no loans, no money. And as such has become very competitive. As little as 40 years ago, brokers didn’t have access to wholesale markets. Today the access rivals the bankers and their lower overhead allows them to take a slimmer margin.

Mortgage Brokers in Canada are regulated by the provincial governments and must carry a provincial license. In Australia, Brokerages started to really appear in the 1980,s but gained popularity through the 1990’s. Australian brokers do not usually charge fees as they are paid a commission for starting the loan process and then a smaller commission percentage paid monthly going forward. Australian brokers are also regulated heavily by the Australian Securities and Investments Commission.

Singapore is one of the newest players in the mortgage brokerage game and have adopted some regulation and licensing from the very beginning. But because it new, Many brokers slip through the cracks causing large gaps and discrepancies in the fee structures.

Being a Mortgage broker can be a very lucrative and rewarding profession. The challenge comes in being able to find creative ways to help potential homeowners finance their dreams. If you are interested in becoming a mortgage broker, Check with your state for licensing requirements as those requirements vary from state to state.