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Difference between a BROKER and a LENDER
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1. FIRST SLIDE - Lender Retail Locations
When discussing the difference between a Mortgage Broker and a
Lender, we have to understand the infrastructure the “Client” has to
access both models. Above you see that Wells Fargo is the actual
LENDER. Borrowers access the bank through “Retail Locations” such as
bank branches and Home Loan Centers.
Each branch location has to be staffed and has expenses for “Bricks &
Mortor” and is duplicated throughout the markets they lend in.
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2. MORTGAGE BROKER MODEL
The Mortgage Broker such as LoanCentral, effective “Bypasses” the
RETAIL branch and accesses the Lenders Pricing and Programs just as the
Retail branches do.
Because the broker has access to Multiple lenders Wholesale rates,
Brokers can take advantage of lenders with the best pricing for loans
available. Professional experienced brokers also know each lenders
underwriting guidelines and which lenders are better for each borrowers
individual situation.
3. PROTECTION FOR BORROWERS
Current FEDERAL REGULATIONS require Mortgage Brokers to be Licensed,
obtain pre-licensing education, pass a National and State Exam and take
ongoing continuing education classes each year.
Mortgage Originators who work for Lenders have NONE of the above
professional requirements. They simply need to register with the NMLS.
Mortgage Brokers are heavily regulated by Federal and State authorities
and have strict disclosure requirements to protect borrowers.
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4. CHOICE - The Key Broker Value Proposition
When a lender is NOT competitive, the broker knows it and will focus on
lenders with the best pricing options for the borrowers specific situation.
Lenders have no incentive to disclose any other lenders programs and in
fact have every incentive to sell their own programs - even if there are
better programs & rates available somewhere else.
If a lender DECLINES a borrowers loan they must start over at another
lender. The broker acts like a Realtor (who can show you OTHER companies
listings) Brokers have CHOICES & the clients best interest in mind.
