Mortgage Brokering
What is Mortgage Brokering?
Mortgage brokering is the act of locating and securing a mortgage lender for a borrower and vice versa. The person or company in the business of mortgage brokering is referred to as a mortgage broker. When a borrower seeks the services of a mortgage broker, the mortgage broker will seek out mortgage lenders to match the borrower with the best possible lender for their needs. A mortgage broker can also locate borrowers for a mortgage lender and is usually paid through commission.
Like a loan officer of a bank, a mortgage broker will assist a potential borrower in the preparation of a mortgage loan application, supporting documentation and explanation of the mortgage transaction. Unlike a loan officer, who normally works for a single lender, a mortgage broker is often independent free to seek out multiple lenders for a particular borrower. Also, unlike a loan officer, a mortgage broker is not an employee of the lender and does not loan money or directly provide mortgages.
Upon receiving a mortgage application and documentation from the borrower, the mortgage broker will then contact multiple lenders, including banks, to determine who has a mortgage product with the most favorable terms for the borrower.
Example:
Borrower A meets with a loan officer at Bank X in order to obtain a mortgage loan. The loan officer will normally be limited to offering mortgages products offered by Bank X.
Borrower B meets with Mortgage Broker Z in order to obtain a mortgage loan. Mortgage Broker Z has the ability of offer mortgages products from numerous lenders.
Regulation of a Mortgage Brokerage
In Canada, mortgage brokers are regulated by the provinces, with each having its own rules and regulations. Generally, brokers must be licensed, follow a code of ethics and complete a written examination. These regulations are intended to insure a certain level of competency and honesty within the industry. Some of the employees of the mortgage broker are licensed also, such as a Licensed Mortgage Associate. The largest association serving the mortgage broker industry is the Canadian Association of Accredited Mortgage Professionals.
Growing Popularity of using a Mortgage Brokerage
Dealing directly with a single bank has been the tradition method of obtaining a mortgage for many years. However, recent findings of Maritz Research Canada has discovered that using a mortgage brokerage is becoming increasingly popular, especially among younger borrowers. In 2008, 23% of mortgages involved mortgage brokers.
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First Foundation is an Alberta based mortgage brokerage that offers numerous mortgage products for its customers. We have relationships with a variety of lenders in the industry so we can provide you with a wider range of options than a typical bank.
Related Terms:
Licensed Mortgage Assistant, Mortgage Broker
Related Links:
- Edmonton and Calgary Mortgage Broker
About Edmonton and Calgary Mortgage Broker, First Foundation Residential Mortgages.
– The Benefits of Using a Mortgage Broker
About the benefits of using a mortgage broker.
If you are interested in learning more about mortgage brokering, please feel free to contact us today!