In Types of Mortgage Lenders – Mortgage Bankers and Mortgage Brokers, mortgage brokers expert witness Robert Trombley writes:
Mortgage brokers generate about 50% of all loans. They have access to a variety of lenders and often offer the most choice in loan programs. Brokers assist the consumer in completing the application and loan selection process and direct them to suitable lenders to fund the mortgage. Besides, brokers can quickly place your loan with another lender if your loan is turned down. Mortgage brokers are paid a fee by the borrower or the lender when a loan closes.
There are two main types of mortgage brokers today – those that represent the borrower and those that do not. It is important to understand the difference between mortgage lenders and mortgage brokers. As a rule, mortgage brokers don’t make a decision whether to extend you a loan, and they don’t actually make the loan. They work as intermediaries between borrowers and lending sources. However this fact does not mean that you are paying a higher rate. Since mortgage brokers obtain their funds from a variety of sources, they can even save you money by shopping your loan. Some mortgage brokers process and close loans in their own names, the others function purely as intermediaries between borrowers and lenders.