Before hiring a mortgage broker, you should understand the role that he or she plays in the process of obtaining your mortgage. Your mortgage broker will not be the person funding your loan; he or she will negotiate the loan with wholesale lenders like the banks. After your interaction with the broker, your loan will be held by the lender, so the broker acts as a mediator between the lender and borrower to negotiate the best terms and push the process along. That is the service provided to you by a mortgage broker and can be extremely valuable if you want to save valuable time and money.
In other words, your broker needs to be someone who understands the industry and is working for YOU rather than working for a lender trying to sell you a particular product that might not truly be best for you. It’s for this reason that the government has placed stiffer regulations on mortgage brokers and that’s why you should make sure your broker is licensed and working in the right corner—yours.
The Nationwide Mortgage Licensing System & Registry (NMLS) is an entity created as part of the 2008 Secure and Fair Enforcement for Mortgage Licensing Act to regulate the industry. In new regulations imposed by NMLS, brokers applying for a license must meet stringent guidelines and undergo an intensive process to make sure their professional history is easily searchable in a database that is available for consumers.
This increased regulation in the mortgage business has made it much harder to become a licensed broker and much easier for clients considering that broker’s services to learn about his or her background and financial records. This transparency not only assures the potential client that he or she is paying for services that will be rendered professionally and honestly—it also assures that the industry will be led by professionals who are devoted to their role as mortgage brokers and experts in the field.
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