{"id":1231,"date":"2021-02-08T06:00:53","date_gmt":"2021-02-08T11:00:53","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=1231"},"modified":"2024-04-25T23:20:03","modified_gmt":"2024-04-26T03:20:03","slug":"on-stage-and-behind-the-scenes-in-a-mortgage","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/on-stage-and-behind-the-scenes-in-a-mortgage\/","title":{"rendered":"On Stage and Behind the Scenes in a Mortgage"},"content":{"rendered":"\n
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The Key Financial Roles\nand How They\u2019re Played <\/em><\/strong><\/p>\n\n\n\n

Especially for first-time buyers, getting to know who\u2019s who\nin the loan process can be complicated \u2014 even surprising! First you meet the mortgage\nbroker. Soon, other actors emerge. As your broker interacts with them, the\ndrama unfolds. <\/p>\n\n\n\n\n\n\n\n

Cast of Characters<\/h2>\n\n\n\n

Knowing everyone\u2019s role helps a buyer anticipate the issues\nthat arise on the way to the closing table. We\u2019ll start with the first one the\nbuyer meets \u2014 the mortgage broker \u2014 and then take a look at the other actors on\nthe scene, and how they relate to each other. Especially important are their\nrelationships to the star of the show: the home buyer. <\/p>\n\n\n\n

The Mortgage Broker<\/h3>\n\n\n\n

The mortgage broker plays a leading role on a home buyer\u2019s behalf.\nThis is the person who sits down with the loan applicant to go over the best\noptions for the circumstances, and the person who\u2019s on the phone as each part\nof the applicant\u2019s credit, income, and debt profile are plugged into the\nprocess. <\/p>\n\n\n\n

Depending on what a state\u2019s law sets forth, the mortgage broker may be more than just a broker; this person may serve as the buyer\u2019s agent. Then, if the aim of the hopeful home buyer is to get a mortgage loan, the duty of an agent is to look out for the applicant\u2019s best interest. <\/p>\n\n\n\n

In California, for example, brokers are agents; they have a fiduciary duty to their clients. By law, California mortgage brokers<\/a> have strict fiduciary duties to loan applicants: they must put the applicant\u2019s financial interest ahead of their own. <\/p>\n\n\n\n

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What are fiduciary duties?<\/em><\/strong> When a professional\nworks in an agency capacity for client in a real estate transaction, that professional\nhas legal duties to act in the client\u2019s best interests. For a mortgage\nspecialist, this could mean taking care to ensure the applicant understands a loan\u2019s\nterms and conditions \u2014 such as the interest rate, the way payments will work,\nthe handling of a borrower\u2019s late payments \u2014 and telling their clients if those\nterms are disadvantageous. <\/p>\n\n\n\n

In short, a broker is a salesperson, but an agent has\nduties, such as a duty of care in guiding you to behave self-protectively in\nthe loan transaction. If you apply for a loan, be clear on your mortgage\nspecialist\u2019s duties to you.  <\/p>\n\n\n\n

The Money Lender<\/h3>\n\n\n\n

The mortgage lender is the financial institution \u2014 such as a\nnational bank, regional bank, or credit union \u2014 with the money a borrower seeks\nto purchase a home. Most state courts and legislatures have determined that mortgage\nlenders in standard loan transactions owe borrowers no fiduciary duties. <\/p>\n\n\n\n

Only in extraordinary circumstances \u2014 where the lender and\nborrower have a longstanding personal and financial relationship predating the\nloan at issue \u2014 could a borrower justifiably rely on a bank to act in that\nborrower\u2019s best interest. <\/p>\n\n\n\n

In the standard mortgage transaction, a bank is not legally\nrequired to disclose, for example, that the borrower is making a risky investment.\nFor another example, a lender has the prerogative to sell the loan to another\nlender without giving the borrower a say. <\/p>\n\n\n\n

Attention, buyers:<\/em><\/strong> The general principle for lending\ninstitutions is that they put their financial interests first in a loan\nagreement. This makes the fiduciary role of your mortgage specialist even more\ncritical.<\/p>\n\n\n\n

The Mortgage Servicer<\/h3>\n\n\n\n

Then there\u2019s the mortgage servicer, which is often a\ndifferent company than the one which originally lent the money. Often, the\nborrower interacts with this company through the website, to check the principal\nand interest and set up automatic payments. According to the U.S. Consumer\nFinancial Protection Bureau (CFPB), a loan servicer handles the administrative\ntasks for each mortgage, answers borrowers\u2019 questions, and manages their escrow\naccounts.<\/p>\n\n\n\n

Like lenders, mortgage servicers usually owe no fiduciary\nduties to borrowers under normal circumstances. <\/p>\n\n\n\n

Pro tip:<\/em><\/strong> A company known as the MERS\u00ae Servicer Identification System<\/a> maintains a large store of data on loans and mortgage companies. The tool allows users to plug in an address or other identifiers to view the loan servicer associated with a home. The company also offers a directory of information for homeowners<\/a> and loan shoppers.<\/p>\n\n\n\n

The Underwriter<\/h3>\n\n\n\n

The underwriter is the financial professional who sizes up\nthe risks and either declines or agrees to accept a borrower. Underwriters decide\nwhether extending money to an applicant will, all factors considered, be good\nfor the lender. The mortgage broker informs the hopeful buyer of the\nunderwriter\u2019s expectations, all the way up to the final approval decision.<\/p>\n\n\n\n

This all happens according to guidelines by which the\nunderwriter assesses the borrower\u2019s capacity to pay the mortgage. Factors\ninclude:<\/p>\n\n\n\n