Mortgage Frauds Uncovered

          Looking for a banking institution to finance your business, the construction of your dream house, or renovating an existing structure? Have you talked to your builder with respect to your home design? Are you on a meager budget? Then you may need to get a loan or a mortgage. For this to be realized, you may need the services of a mortgage broker to assist you in finding a a bank who would give you the much needed funding without overcharging you with high interest rates. He acts as a middle man between you and the bank or lending company.           

          The broker’s functions are as follows: 1. Marketing to attract clients, 2. He assesses the borrower’s circumstances like assessment of credit history and the ability of the borrower to pay the mortgage loan obtained, 3. Assessing the market to find a mortgage product that fits the clients needs, 4. Applying for a lenders agreement in principle, 5. Gathering all needed documents, 6. Completing a lender application form, 7. Explaining the legal disclosures and lastly, Submitting all material to the lender.           

          The banks have used brokers to outsource the job of finding and qualifying borrowers, and also to outsource some of the liabilities for fraud and foreclosure onto the originators through legal agreements.          

          During the loan negotiation, he gathers and processes all the necessary requirements for mortgaging your real estate. He charges a commission between 1-3%. This is for all the expenses he has incurred while negotiating  your loan.               

          They are different from a bank’s loan officer in the sense that they have different functions. A loan officer works under the umbrella license of their current institution, typically a bank or direct lender. Both positions have legal, moral, and professional responsibilities as well as liabilities to prevent fraud and fully disclose loan terms to both consumer and lender.  The broker meanwhile acts as a conduit between you and the bank or lending institution and would require a license. States regulate lending practice and licensing, but the rules vary.          

          Mortgage Brokers have been active in Australia since the early 1980s however they have only become a dominant force in the mortgage industry during the late 1990s on the back of aggressive marketing by Aussie Home Loans & Wizard Home Loans. Approximately 35% of all loans secured by a mortgage in Australia are introduced by these brokers. Brokers are now regulated by the Australian Securities and Investments Commission. The new national consumer credit protection legislation includes a licensing 
regime and responsible lending obligations          

          A large segment of the mortgage finance industry is commission based. Potential clients can compare a lender’s loan terms to those of others through advertisements or Internet quotes.           

          In the 1970s, mortgage brokers did not have access to wholesale markets, unlike traditional bankers. Today, mortgage brokers are more competitive with their access to wholesale capital markets and pricing discounts. A mortgage broker has lower overhead costs compared to large and expensive banking operations because of their small structure. They can compete for clients by offering lower rates instantly.            

          For peace of mind before entering into a mortgage with your bank, try to look for a broker first. This way he can negotiate for you and the lending institution assuring you of a fraud free transaction.

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