Differences between Mortgage Bankers and Mortgage Brokers
Bankers are classified as direct lenders. The moniker works because they are either in the practice of lending their own money or that of the financial institution that they represent.
In contrast, brokers are middle people whose network often includes a full array of bank partners and lending experts. When contacted by a borrower, the broker reaches out to the alliances that they feel would be particularly interested in funding the loan in question.
B. Education and Training
As with the majority of banking jobs, for those who desire to seek an upper management position at some point in the future, an advanced degree and certification will be most beneficial to your ascent. Specific pursuits to consider include a Master's in Business Administration (MBA) and/or a Certified Mortgage Banker (CMB) accreditation.
Further benefiting both the aspiring banker and broker is a good track record for sales and customer service. To acquire such experience it is recommended that newly minted bankers (beginning as loan officers) and brokers get acclimated to the process of educating clients on specific lending products, for instance, home equity lines, second mortgage or refinance loans, and sub-prime loans.
To enhance their knowledge of the home finance industry, they can learn about real estate and its unique lending practices. Furthermore, they can educate themselves on governmental housing programs inclusive of the U.S. Department of Housing and Urban Development (HUD, under the scope of the Fair Housing Act, FHA), Government Refinance Assistance, the Housing Finance Program, and the Home Energy Rebate Program, among so many others.
To introduce themselves to others within the real estate finance sector, aspiring bankers and brokers should attend networking sessions and seminars to meet with other professionals in the field and to stay abreast of new developments, hone their knowledge of best practices, and learn about regulatory protocols.
And, lastly, in order to take mortgage training courses and the subsequent Certified Mortgage Banker (CMB) accreditation, it is required that individuals be members of their state affiliated mortgage banking associations.
C. Questions for Potential Employers
And once ready for a full time lending position, questions to ask of potential employers include:
- Commission split levels.
- Fees paid by bankers and brokers out of their split.
- Employment Training.
Additional questions to ask of potential employers include:
- Does the company supply leads, or is the banker-broker expected to seek out their own leads and perform their own marketing?
- For those companies that do supply leads, from where do they originate: direct mail, radio or television ads, newspapers, web sites, or online forums?
- Approximately, how many loans do the top lending officers close on a weekly/monthly/annual basis?
- What types of home finance loans does the company primarily represent?
- What is the range of loan products the company represents?
- How long has the company been in business and how closely does it adhere to state and national lending regulations?
- What is the estimated number of hours lenders are expected to work? Is it acceptable to work additional hours, if desired? It is acceptable to work weekends, if desired?
While both bankers and brokers are professionally bound to uphold legal and moral responsibilities, to prevent fraud, and to fully disclose loan terms to both consumers and lending associates; where brokers are concerned there is a different onus upon them than that of bankers.
Due in part to the added risk factor and the lack of formalized structure, the mortgage industry is regulated by 10 federal laws, five federal enforcement agencies, and over 49 state laws or licensing boards.
The majority of states require that mortgage brokers be licensed to comply with the particular banking and finance laws of their state. Although the majority of states have regulatory lending and licensing practices in place, the specific rules tend to vary.
One commonality of most states is a separate license for those who wish to be 1) a Broker Associate, 2) a Brokerage Business, or 3) a Direct Lender.
And, in addition to being registered with the state, brokers typically are held personally liable (punishable by revocation or prison) for the life of a loan should an incidence of fraud occur.
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