Saturday, June 20, 2009

mortgage Brokers

mortgage lending has become increasingly complex.As a result,the demand for Knowledgeable mortgage brokers has increased significantly.As mentioned previously,a mortgage brokers operate differently from a mortgage banker in that a broker does not actually make loans. Instead, a mortgage broker specializes in serving as an intermediary between the borrower(the customer) and the lender (the client).Many mortgage Brokers serve as correspondents for large mortgage bankers who desire to do business in an area but do not feel the volume of business justifies the expense of staffing a local office. as compensation, the broker receive a fee for taking the loan application and portion of the origination fee if and when the loan closes. Many industry analysts expect the role of mortgage brokers to continue to grow in conjunction with the explosion in information technology. As brokers gain access to instantaneous interest rate quotes from multitudes of mortgage originators, their ability to find the lowest-cost option for borrowers should increase the value of their services.
In this growth of mortgage brokers also lies some concern. it has been argued that mortgage brokerage frequently can be part-time activity wherein the broker generates a fee through a one time involvement with the borrower. Under theses conditions, problems could arise. first, the broker could be only marginally Knowledgeable. second, and more importantly,there is the risk of moral hazard. the broker is offering a complex service on a one-time basis to borrowers,many of who may be poorly informed. since the broker often has no continuing involvement with the loan or borrower, this creates an incentive for exploitation .

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