by J.M.

Created on: August 24, 2008   Last Updated: August 27, 2008

What exactly is a mortgage loan officer and how does one get paid?

A mortgage loan officer acts as the middle person that facilitates a business relationship between a lender and a borrower. A mortgage lender simply gives money to a borrower that agrees to pay back all monies at an agreed set of time with interest. This also makes a lender an investor. Ultimately, a mortgage loan officer's job is guiding a would-be borrower through the complex procedures involved in qualifying for a mortgage loan. This process may be lengthy; requiring loan officers to manage, organize, and present all paper work relevant to a lender's criteria for qualification, i.e. proof of employment, paystubs, credit history, or any legal documents. Moreover, a mortgage loan officer working for a broker usually gets paid a commission based on the amount of the loan[s] he or she sells. In contrast, a mortgage loan officer working for a bank typically gets paid a salary.

What are the differences between a mortgage broker and a mortgage banker?

A mortgage bank is a state-licensed bank specializing in lending mortgage loans by utilizing their own capital, and/or also representing other-usually large-lending companies. On the other hand, a mortgage broker connects financial institutions and/or individuals who wish to provide loans to home buyers. It's important to note, a mortgage broker may not be a state-licensed financial institution; but rather represent a variety of both traditional and alternative options a mortgage banker may not otherwise provide.

How would the differences between a mortgage broker and a mortgage banker affect a potential home buyer?

Banks usually give loans to people with an above average credit score, hoping to minimize the liability of a borrower defaulting on a loan. This practice typically allows banks to provide loans with lower interest rates. In contrast, usually interest rates are higher when going through a mortgage broker, but may be the only way possible for a borrower to qualify for a home loan with a shaky credit history.

What are some of the new disclosure laws that could affect mortgage brokers!

In response to the mortgage crisis due in part to predatory lending, in where critical information were deliberately made unclear, or altogether left out of the consumer's decisions making process. Congress has introduced a bill called, The Mortgage Broker Transparency and Accountability Act of 2007. This bill is designed to protect a borrower from being duped into purchasing a high-cost mortgage they would otherwise qualify for. Also, this bill will require any mortgage broker to disclose all risks and benefits of a mortgage product. For instants, mortgage brokers will be required to disclose a borrower's obligations to pay taxes and be informed of any prepayment penalties and/or balloon payments in respect to any mortgage product purchased.

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