Are you looking at taking out a mortgage loan to handle some important financial planning for your future? Help for this comes in the form of mortgage lenders who are the intermediary between you and the loan. They are responsible for selling mortgage loans from individuals or banks.

Until recently, it was banks and other financial institutions selling their own mortgage loans. However, with the business and demand of mortgage booming multifold, it has become imperative for them to get help from mortgage lenders. Now, in most developed and emerging mortgage markets, mortgage lenders have become the largest sellers of mortgage loans to customers.

Though most mortgage lenders comply with banking or finance laws in the jurisdiction of the consumer, there are still some who do not follow the rules and default. Also, the extent of the regulation is dependent on the jurisdiction of the bank, customer or mortgage lender. There is also the problem of the way they hound customers to buy various types of loans and confuse them to get a high commission.

Role of Mortgage Lenders

Mortgage lenders are able to access the wholesale capital markets as well as pricing discounts leading to them pass discounts on to their customers. They are also able to lower rates to get more clients. Thus, mortgage lenders are able to gain more than 60 to 70% of the mortgage loan market. Also, they are able to get loan approvals from secondary wholesale market lenders like Fannie Mae. They can then offer the best rates after comparing the rates for the day. To add to these, they can close a loan and service the loan.

Should I Hide?

Mortgage lenders need to disclose yield spread premium, unlike bankers. This has lead to a lot of ambiguity as well as discrepancy in identification of the true cost to get a mortgage. Also, per the broker disclosure requirements, it is usually portrayed that lenders charge more to get the mortgage than a banker, when it is actually the same. Mortgage lenders have been associated with fraud and have lead the way to predatory mortgage lending practices. Through this, they have been successful in deceiving clients who are on the lookout for mortgage loans. They have been responsible for predatory lending which is done through one or more of these methods:

• Providing False income and other documents
• Not putting forth hidden fees or yield spread premium prior to taking a loan
• Not providing various RESPA documents like the Truth in Lending, Special Information Booklet or Good Faith Estimate leading to disillusion among borrowers
• Forcing the borrowers to opt for a refinance when there is no need for it
• Convincing customers to opt for a higher loan amount
• Duping customers on different aspects of money borrowing due to their ignorance

Thus, opting for a mortgage lender might seem beneficial but it is advisable to go directly to the bank or financial institution.