- The clients in a brokered transaction are the borrower and the lender
- Provide Borrowers who are suitable for the Lender
- Provide appropriate protection against fraud
- Facilitate the transaction to its successful completion (funding).
- These three assumptions form the cornerstone of the relationship between the Lender and the Brokerage community. The best way to ensure that these assumptions are consistently met is to adopt them as core values or philosophies that are applied to every transaction. To meet these assumptions, they must first be explained.
- Providing Borrowers that are suitable for the Lender
- The Lender’s first assumption is that the Mortgage agent will only send an application on behalf of a Borrower that fits the Lender’s lending criteria. Lending criteria include such things as income and employment requirements, property requirements, credit requirements and so on. This means that the Mortgage agent must know and understand the Lender’s lending criteria and be able to accurately assess the Borrower to determine if they meet those criteria. Unfortunately, a typical Lender complaint is that some Mortgage agents send them applications for products that they do not have. This type of error can erode the confidence that Lenders have in the Brokerage community.
- Providing appropriate protection against fraud
- Lenders have been suffering from an increase in mortgage fraud over the past several years. Although not technically a Mortgage agent’s legal responsibility, it is a Mortgage agent’s ethical and moral responsibility to make reasonable attempts to protect the Lender from fraud. In many brokerages’ set of Best Practices it is deemed necessary for the mortgage agent to review all documentation received from the Borrower for accuracy and consistency. This means identifying any signs of potential fraud, such as poorly written or typed income verification as well as verifying income and identity.
- Facilitating the transaction to its successful completion
- A Lender expects that a mortgage agent has submitted an application to that Lender because he or she has determined that Lender to be the most appropriate for the Borrower. In addition, the Lender expects that, if approved, the mortgage transaction will close. That requires the mortgage agent to ensure that the borrower is committed to completing the transaction and understands what is required of him or her to conclude it. A lender also expects that a mortgage agent will be available to assist in ensuring the transaction closes if there is anything that the mortgage agent is required to accomplish such as meeting outstanding conditions.
- Act in the Borrower’s best interests
- Completely analyze the Borrower’s needs
- Make appropriate recommendations based on the Borrower’s needs
- Facilitate the transaction to its successful completion (funding).
- These four assumptions form the cornerstone of the transaction. By ensuring that these assumptions are met, the Mortgage Agent will develop a strong relationship with the Borrower and ensure that the industry as a whole is well represented.
- The amount is calculated by multiplying the mortgage amount by the finder’s fee.
- .0085 x 800,000 = $6,800.00
- Pros: can assist in determining the affordability of a mortgage thereby ensuring that the mortgage is suitable for the Borrower, a requirement of the MBLAA.
- Cons: time consuming and the Borrower may not wish to go into as much detail as is required to complete a budget
- The initial consultation is extremely important in identifying your client’s needs, however this is an opinion based question. As long as you can back up your decision with valid points there is no right or wrong answer.
- In common law, agency refers to the relationship that exists when one person or party (the principal) engages another (the agent) to act for them.
- The following are some of the main duties an agent has to their principal:
- A duty to account for monies received or spent while acting on behalf of the principal
- A duty to protect the confidential information of the principal
- A duty of dealing with a third party or the principal in good faith
- A duty to act in the best interests of the principal
- A duty of loyalty to the principal
- A duty to act with reasonable care and skill at all times
- A duty to follow and obey the instructions of the principal
- A duty to indemnify the agent, and
- A duty to pay the agent, for example, a commission or fee
- Credit
- Collateral
- Capacity
- Character
- Capital
- This is a personal opinion with no right or wrong answer
- In the lender’s commitment letter, there will be a list of conditions that must be met before the mortgage can be funded. One of the many conditions may be to provide the lender with appropriate income verification. The commitment letter will typically describe what documentation is considered acceptable to the lender. It is up to the mortgage agent to advise the borrower of the conditions and assist the borrower in meeting the conditions to ensure that the mortgage is funded.
- The lender/investor disclosure is prepared before submitting an application to the investor, while the borrower disclosure is prepared after receiving a commitment from a lender
- An amortization schedule is a printout of all of the mortgage payments during the term, including the amount of interest and principal per payment and the outstanding mortgage balance after each payment is made.
- Once the lawyer has completed the appropriate tasks, the mortgage will be registered, and the funds will be disbursed by the lawyer from the lawyer’s trust account.
- While the borrower pays the lawyer’s fee, the lawyer is working primarily on behalf of the lender.
