You might be asking yourself this question, ''What is the difference between a ''mortgage banker'' and a ''mortgage broker?'' Either you are familiar with the terminology because you have utilized the services of a broker in the past, or even are thinking of crossing over from the broker portion of the industry into the banking world. The main difference between the two is simple; a broker is a third party ''middleman'' who communicates with a lending source to provide an analysis and wholesale pricing to the borrower. A mortgage banker is a direct lender, providing money to a variety of clientele, whether it is commercial, residential or even for investment group purposes.
Who are bankers able to provide services for?
The types of loans a broker provides versus a banker differ greatly as well. In addition to conventional loans, those being provided by capital investors, bankers supply loans backed by the Federal Housing Administration (FHA) or Veterans Administration (VA), providing a more stable and set type of loan program. Mortgage bankers provide middle-income home buyers the majority of FHA and VA loans because bankers are able to provide funds to home buyers and investors in all regions of the country, whereas brokers are sometimes restricted as to where and whom they may provide their services.
Nationally, bankers service more than $2.0 trillion in home mortgages, in 2003 leading the nation in financing with approximately $2.3 trillion in home mortgages alone, as well as commercial, savings, and personal loans.
For the average income home buyer, a mortgage banker plays a crucial role. They have been the main source of federal government loan programs since 1970, allowing for consumers with less than perfect credit, lower income levels, who would not qualify otherwise through other types of lending institutions, a means of purchasing a home. In 2003 alone, mortgage bankers provided 83 percent of these FHA and VA loans.
Components of the mortgage banking industry
Mortgage bankers make, sell, and service mortgages by originating clientele, regulated by numerous federal law and enforcement agencies in over 45 states. That being said, it is imperative first and foremost that you inquire as to your states’ licensing requirements for each and every activity interrelated with the industry. For instance, to originate requires licensing where as processing does not. Find out which part of the banking business you would best fit and move forward from there.
Origination- By definition is the creation of any mortgage; initiated by loan officers by locating borrowers and taking an application on both the consumer and property to be financed. This is the bread and butter of the business as your income is determined by how much you produce, or originate. To give you an idea, as of October 12, 2008 the average annual salary earned by a loan officer in the mortgage banking industry ranged between $67k to $136k! Origination is the meat and potatoes of this industry. The more you originate, the more money you will make.
Processing & Underwriting Determine Approval-The processing and underwriting of each and every file is crucial. This decides whether the borrower will be approved for the loan. A processor collects documentation to verify information provided by the borrower on their initial application. In addition, they obtain a credit report and confirm the property’s value by ordering an appraisal. After all information has been gathered it is sent to underwriting for evaluation, where the risk is decided by determining salability on the secondary market after the loan has been closed. The main objective is the ''closing'' which is the signing and recording of documentation to finalize the loan. This is how you get paid, so it is imperative everything is disclosed to the processing and underwriting team in order to ensure approval.
Requirements and Skills
Here are the skills which lenders look for in mortgage banking professionals:
- Superior communication skills
- College degree or equivalent
- Microsoft-Office proficient
- Experience in originating new business-SALES
- Strong work ethic and ability to multi-task
How to find the right lender for employment
Of course, it is just as important for you to find the right place to apply your skills. You want to work for a company who is able to be flexible when it comes to their guidelines, and who values you as sales professional. Make sure the company has a strong mission statement and can provide you with the support you need to produce. Do your research. Find out how long they have been in business. Check their current status by going to your state’s department of real estate website running a license check. Determine if you will be given the right amount of attention or whether you may get lost in the shuffle. How accessible is management? This is dependent on the size of the company. All of these factors will guide you in deciding which job you will apply for, so do your due diligence!!
You now know the various components to the mortgage banking world and what it takes to be successful in this industry. If you feel you are a fit, get started today! Your six figure salary awaits you.
