Definition of a Mortgage Broker
A mortgage broker is a professional in the business of arranging real estate financing between a mortgage lender and a mortgage borrower.
A mortgage broker is not an employee of a mortgage lender, but acts as an intermediary between the lender and the borrower. A mortgage broker will consider the offerings of numerous potential lenders when choosing the mortgage product and lender most suitable for the borrower.
A Mortgage Broker has contacts with numerous mortgage lenders, offering to lend money to potential borrowers. The mortgage terms offered, not only in mortgage rates, but whether fixed rate, variable rate, adjustable open or closed mortgages, long and short terms , are a part of the available options.
Mr. McGillicuddy contacts a mortgage broker looking for the best terms to suit their needs. The Mortgage Broker will review the mortgage products offered by their lenders and will select those that best suit the needs of Mr. McGillicuddy. Mr. McGillicuddy then chooses the mortgage product from the selection provided by the Mortgage Broker. The Mortgage Broker arranges the mortgage with the chosen lender and guides the buyer through the mortgage process until funding. The Mortgage Broker receives a commission from the lender for originating the mortgage.
Popularity of Mortgage Brokers
The Mortgage Broker channel continues to show strength, brokering 28% of all mortgage activity over the past year, including 40% of originations, according to 2013 stats from CAAMP.
Among first time home buyers, a mortgage broker was used in 45% of the transactions. The increased popularity is no doubt due to the wider array of products offered by a mortgage broker, and the value of competition in seeking out multiple lenders, rather than merely a single lender.
Regulation of Mortgage Brokers
In Canada, every mortgage brokerage must have at least one licensed mortgage broker retained by the company. Mortgage brokers must be licensed in the province in which they conduct business, must have a certain amount of experience in the industry, conform to a code of ethics, and pass a written test. Only one broker of record is allowed per brokerage – all other employees that are licensed and arrange mortgages are actually referred to as “Mortgage Brokers. The mortgage brokerage itself must also be licensed to do business.
Many mortgage brokers and associates belong to the Canadian Association of Accredited Mortgage Professionals. CAAMP provides its own standards for mortgage brokers, in many cases containing a higher standard of training and experienced than required by province.CAAMP also carries a designation of Accredited Mortgage Professional for those brokers and associates that meet a higher criteria.
At First Foundation, we are not employees of a mortgage lender, nor are we mortgage bankers. Our freedom to do business with multiple mortgage lenders enables us to provide our customers with multiple options in obtaining their mortgage needs. In addition, our broker owner, Gord McCallum is a member of CAAMP, holding the designation of Accredited Mortgage Professional.
Broker of Record
In Alberta Gord McCallum, AMP is the broker of record for First Foundation.
In Saskatchewan Jackson Middleton, AMP is the principal broker for First Foundation operating under Saskatchewan Brokerage licence #316020.
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If you are interested in learning more about a mortgage broker, please feel free to contact us today!