In recent years, the term “mortgage broker” causes many suffering homeowners to cringe. The difficult financial times endured these past few years in the mortgage lending market are dwindling and new hope is on the horizon. Avoiding mortgage fraud and deception is on the mind of every future and current homeowner and should be on the mind of every person looking to become a mortgage broker. For those and many other valuable reasons, an effective mortgage brokers course can provide you with all the essential knowledge to be the best in the business.
The Duties of a Mortgage Broker
A mortgage broker acts as an intermediary who brokers mortgage loans on behalf of individuals or businesses. These loans can be through private lenders or banks and other lending institutions. Traditionally, banks and other lending institutions have sold their own products. However, as markets for mortgages have become more competitive, the role of the mortgage broker has become more popular. Today in most developed mortgage markets (especially in Canada, the U.S., the UK, Australia, New Zealand and Spain), mortgage brokers are the largest sellers of mortgage products for lenders.
Mortgage brokers exist to find a bank or a direct lender that an individual seeks with a specific loan the individual is seeking. Mortgage brokers in Canada are paid by the lender and do not charge fees for good credit applications. The majority of mortgage brokers are regulated to ensure compliance with banking and or finance laws in the jurisdiction of the consumer; however, the extent of the regulation depends on the jurisdiction. Only one state within the U.S. has no laws that govern mortgage lending.
Most banks are profit-making, private enterprises, however, some are owned by government, or are non-profits. Central banks are normally government-owned banks, which are 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 mortgage broker’s activities varies with jurisdiction. For example, anyone offering mortgage brokerage in the UK 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 a sales job: pointing the borrower in the direction of an appropriate lender, no advice given, and a commission collected for the sale.
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 borrower’s 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 client’s needs. (Mortgage presentation/recommendations)
- applying for a lenders agreement in principle (pre-approval)
- gathering all needed documents (paystubs/payslips, bank statements, etc.)
- completing a lender application form
- explaining the legal disclosures
- submitting all material to the lender
- upholding their duty by saving their clients as much money as possible by offering best advice for the clients circumstances
According to a 2004 study cited at Wikipedia.com by Wholesale Access Mortgage Research & Consulting, Inc., there are approximately 53,000 mortgage brokerage companies that employ an estimated 418,700 employees and originate 68% of all residential loans in the U.S.. The remaining 32% is retail done through the lender’s retail channel, which means the lender does not go through a broker. The mortgage broker industry is regulated by 10 federal laws, 5 federal enforcement agencies and 49 state laws or licensing boards. The banks have used brokers to outsource the job of finding and qualifying borrowers, and also to outsource some of the liabilities for fraud and foreclosure onto the originators through legal agreements.
Mortgage Broker Courses
Classes for aspiring mortgage brokers provide individuals with an understanding of state and federal regulations, and prepare them to take the licensure exam administered by their state’s licensing board. Courses are most often offered within a structured online education program that culminates in a certificate of completion. Mortgage broker classes can also be found as part of an online curriculum for associate degree programs in mortgage banking.
- FHA Training and Ethics
This introductory course presents the basic principles and processes of the mortgage loan industry. Topics include calculating loans according to value and debt to income ratios, mortgage underwriting procedures, quality control, compliance, fraud and ethics.
Providing an overview of the mortgage lending market and processes, this course emphasizes federal regulation and state laws related to the mortgage industry, documentation and credit evaluation.
- Secondary Market
This class is a study of the secondary mortgage market and its history. Concepts covered include mortgage-backed securities and bonds, regulatory requirements, and strategies for selling closed real estate mortgages.
- Online Continuing Education Courses and Class Overviews
Most states require licensed mortgage brokers to complete a number of continuing education courses in order to maintain or renew their license. These classes are primarily offered online through the continuing education departments at major universities and colleges.
- Latest Trends
The purpose of this course is to expose working mortgage brokers to new mortgage products that have entered the market. The mortgage industry is constantly changing, and this class provides individuals with a basic understanding of the market changes which drive the development of new product lines.
- Mortgage Fraud
This class familiarizes professionals with fraud scams and how they affect the interest rates and fees for mortgage loans. Students learn to recognize and prevent involvement in fraudulent behavior, as well as how to protect customers and lending companies from falling victim to fraud.
- Ethics Refresher
This course covers basic principles of ethics and reviews key federal legislation relevant to the mortgage lending industry. Emphasis is placed on applying laws and regulations to real-life situations.
Breaking into the U.S. residential mortgage business is just a click away! Get licensed today.