Mortgage brokers are charged with a serious task: Their job is to find the best mortgage loans for the borrowers who come to them. Brokers don't work directly with banks, but rather offer a wide range of mortgage products from a large group of lenders. Today, most states require their brokers to pass exams and take continuing education courses to remain up to date on the latest lending procedures. This is good for the consumers who entrust mortgage brokers with what is usually the largest purchase of their lives.
- You want to work with mortgage brokers who are committed to providing quality service. While it's impossible to guarantee this, your odds are better if you work with brokers who continually educate themselves on the latest changes in mortgage laws and lending practices.
That's why the National Association of Mortgage Brokers, the largest trade association serving the industry, offers its members the chance to earn three different designations: the General Mortgage Associate (GMA), Certified Residential Mortgage Specialist (CRMS) and Certified Mortgage Consultant (CMC) designations. Each of these designations require mortgage brokers to pass exams and complete a set number of hours of coursework.
Working with a mortgage broker who has at least one of these designations doesn't guarantee you'll receive good service. But it does increase the chances. - Each state regulates mortgage brokers in its own way. Some states are extremely strict, and will require that mortgage brokers first obtain a license to do business and pass a specific number of continuing-education courses each year. Many states also require mortgage brokers prove they are financially stable. Some states conduct background checks to make sure potential mortgage brokers don't have criminal records or that they haven't had their licenses revoked in other states.
Other states, though, have no regulations at all.
For instance, in Delaware, where brokers are regulated by the Office of the State Bank Commissioner, potential brokers must maintain a bond of $25,000 and provide references from companies that have done business with them in the past when renewing their license. In Indiana, brokers must maintain a surety bond for $15,000 and take 24 hours of loan-brokering classes.
In Kansas, however, mortgage brokers are not req uired to meet any requirements.
For a complete list of state-by-state regulations, visit Bankrate.com's online rankings. - When searching for a reputable mortgage broker, make sure to look for one that is a member of the local state mortgage brokerage association and the National Association of Mortgage Brokers. These associations usually require brokers to take a certain number of continuing-education hours each year to remain members.
You should also run a search with your local Better Business Bureau office to determine if past customers have filed any complaints. Finally, ask brokers to provide a list of references. By calling the people on this list, you'll discover if brokers kept their promises, provided good service and always acted ethically.
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