An Overview of Mortgage Brokers & Their Services

Mortgage Broker Services• Mortgage brokers are in the

business of providing various mortgage-related services to individual consumers. They differ from banks or lending institution in that they are basically intermediaries between home buyers and financial institutions (e.g., banks, credit unions, savings and loan institutions, etc)

Mortgage Broker Services

• They are financial advisers who compare and recommend various loan products to consumers after assessing credit history, income guidelines, and other pertinent information.

Mortgage Broker Services• In addition to the primary

function of facilitating mortgage applications and finding suitable lenders for a mortgage applicant, they also provide various other financial and non-financial services. The scope of services provided vary among individual brokers.

Mortgage Processing• Mortgage brokers are basically intermediaries, or middle-men, between

home buyers and financial institutions (e.g., banks, credit unions, savings and loan institutions, etc). The primary functions include the following:

– Gather financial information from the borrower (information about income, liabilities, and assets)

– Gather supporting documents such as identity proof, income proof, tax returns, etc

– Prepare mortgage loan application.– Pull credit report and credit scores for applicant(s).– Match the borrower with appropriate loan products and lending institutions.– Submit files to financial institutions for final review, underwriting, and eventual

funding at closing.– Act as a primary contact between the borrower and lending institution, including

following up with lending institution for additional information or requirements until the closing of the property transaction.

Additional Services Provided:

There are many additional services provided by a quality mortgage broker.

Loan Modifications and Home-owner Assistance Programs

• Due to rise in the number of foreclosures and borrower defaults, a large number of brokerage firms have begun providing Loan Modification and Homeowner Assistance Programs.

Loan Modifications and Home-owner Assistance Programs

• They basically work with consumers and banks to help settle and mortgage obligations by reducing mortgage payments or providing other short-term assistance to help consumers stay current on their mortgage and prevent their home from going into the foreclosure process.

Refinance

• Provide various refinance programs for consumers allowing them to take advantage of historically low-interest rates. Consumers can refinance their existing mortgage loan to shorter term loan (e.g., a 15-year old loan) and more favorable borrowing terms (lower interest, reduced or no PMI).

Real Estate Services - Buying, Selling, Renting

• Many brokerages also provide real estate services. They can help the loan borrower with their home-finding needs in addition to the mortgage services.

Construction loans for remodeling

• Many mortgage lender provide supplementary services relating to the construction industry such as construction financing, locating contractors, and other administrative services for the construction process (e.g., filing permits, hiring Architects/Engineers, contractor services).

Notary Public Services

-Administer oaths and affirmation-Affidavits and depositions-Acknowledgements of written instruments such as deeds, mortgages, and powers of attorney.

Mortgage Brokers: Post Subprime Mortgage Crisis

• The extent of services provided by these firms has greatly changed as a result of the sub-prime mortgage crisis of 2007-2008. These firms have come under attack for making "bad" loans to individuals who were not qualified for mortgage loans or simply could not afford the mortgages they were undertaking.

Mortgage Brokers: Post Subprime Mortgage Crisis

• As a result of federal regulation, there are much stricter guidelines on the scope of services that mortgage brokerage firm can provide--there is also increased oversight by federal and state regulatory agencies.

Further Reading

• Canadian Mortgage Services are the leading group of mortgage brokers serving Brampton & Mississauga. Visit us today at http://www.cmsmortgages.ca/ for all of your second mortgage & refinancing needs.