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MBA Urges Regulators To Avoid Invoking Suitability Standards
The Mortgage Bankers Association (MBA) recently made a preemptive strike against what it obviously perceives as the next threat against the mortgage industry - "suitability standards." Read more...

 

Why Mortgage Consultants Work For Their Clients And Not For Lenders

If you are going to submit an application for a mortgage, you will feel that you are in a sort of contest with the lender, since you are on two different sides of the matter. The lender wants the highest interest rate so he can make the most money, and you want the lowest interest rate so you can save the most money possible. Mortgage consultants (courtier hypothecaire) will act as a middle man in these negotiation transactions.

Are the mortgage consultants on the side of the lender or the borrower in this situation? When you hear that the lending institution pays the mortgage consultants' commission, you may think that the broker is going to work for the interests of the lender but this is not what happens. The home loan business is a very competitive business anywhere around the world. Some of the larger mortgage consultants (courtier hypotheque) handle billions of dollars of mortgages each year. Lending institutions are interested in working with mortgage consultants so they can increase their loan business as much as possible.

The lending institutions pay all of the brokers about the same fee and because of this, mortgage consultants (courtier hypothécaire) are fairly independent, since they are going to make the same commission from any one of the many lenders. The borrowers are pleased that the lender pays the fee, and he does not have to do so. Fierce competition such as this leads lenders to partner with mortgage consultants and that a broker can show a borrower's loan file to 50 lenders without any extra effort by the borrower. This is the reason the borrower can be considered a client of the mortgage consultants (courtier hypothécaire) and a broker will try to get the best mortgage package for each of his clients.

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