Intro – Mortgage Bankers
We’ve heard the term mortgage banker in the past, but what exactly do they do? Many of us have worked with them when buying a home, but we may not understand the full scope of the job performed by home mortgage bankers or how exactly the bankers’ mortgage lending process works.
This article will take you through the full job description of this key player in the home buying equation, explain about how mortgage bankers differ from mortgage brokers, tell you what to look for in a good one, and give you a run down of exactly what they do for you when you purchase a home.
Let’s start with the official definition of a mortgage banker from Investopedia:
“A company, individual or institution that originates mortgages. Mortgage bankers use their own funds, or funds borrowed from a warehouse lender, to fund mortgages.”
A benefit of dealing with a mortgage banker for your home loan is that this is their specialty; they don’t usually work with other banking products, and many times the financial institution they work with also has dedicated loan underwriting, meaning a faster loan process.
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What’s The Difference Between a Mortgage Banker and a Mortgage Broker?
These two jobs sound pretty much the same, but there are actually some key differences. An interesting difference between home mortgage bankers and home mortgage brokers is that mortgage bankers close the loans in their own names using their own funds (i.e., the funds of the institution they work for).
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Mortgage brokers on the other hand act as facilitators for different financial institutions and aren’t typically associated with just one, and they do not close loans in their own name.
Main Duties of a Mortgage Banker
You may be surprised at the full list of duties for mortgage bankers. They do a whole lot more than just grant mortgage loans. Approvedmortgage.com and the Houston Chronicle offer a full list of job duties for mortgage bankers in general, including the private mortgage banker.
- Assist clients with applying for home loans and refinancing
- Seek out new clients, often through bankers’ mortgage lending seminars
- Form relationships in the real estate world
- Act as the main point of contact throughout the mortgage process
- Know and be in compliance with all state and federal regulations
- Negotiate the conditions of the loan with the client and ensure they understand all points
- Collect all necessary credit report and financial information for the loan application
- Abide by the Federal Real Estate Settlement Procedures Act (RESPA) and provide applicants with a good-faith estimate that has full disclosures of fees
- Analyze client application to determine whether they qualify for the loan
- Explain in writing to the applicant why a mortgage application was denied
- Send out mailers to solicit business
The job of a mortgage banker can really be broken down into three main areas:
- Soliciting Business: Home mortgage bankers often form relationships with various professional in the industry, such as real estate agents and home developers, from whom they can get referrals. This is actually a benefit to the homebuyer as their real estate agent may have worked with a particular mortgage banker for many years and can give them a referral to a trusted loan professional.
- Performing Financial Analysis: A key part of the loan process for mortgage bankers is collecting the necessary financial information from clients to assess whether they are eligible for a mortgage loan. This can include tax returns, paystubs, profit and loss statements, and a list of debts and assets. You can find a full checklist at bankrate.com.After gathering all this information, the home mortgage banker analyzes the applicant’s financial status to determine if they are eligible for a mortgage loan and if so for how much.
- Financial Counseling: While we may not see counseling as a typical part of the duties for a mortgage banker it is one that many pride themselves on. They may counsel clients on what debts to pay off to help them qualify for a loan, how much money to put down, or when it makes sense to refinance.
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Career Requirements for Mortgage Bankers
If you are wondering what type of degree you need to become a mortgage banker, you may be pleasantly surprised: even more than a college degree, home mortgage bankers need to be ambitious, dedicated, and analytical — and having a sales background is definitely a plus. Typically, a degree is not required.
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Some of the core skill requirements, according to Job Hero, for those in the mortgage banker field are:
- Excellent analytical skills
- Basic mathematical abilities
- Ambitious and self-motivated
- Excellent communication skills
- Working knowledge of software used in the industry
- Knowledge of FHA and HUD guidelines
- Knowledge of conventional and government guidelines in loan underwriting
Preferred but not always required:
- Being proficient in loan underwriting software
- Having a license through NMLS (National Mortgage Licensing System)
Top Rated Mortgage Bankers
As in any industry, there are those who rise to the top. The National Mortgage News has a listing of 2015 Top Producers, which includes a list of the best of the best mortgage bankers with the highest volume of loans.
If you want to know which banks are at the top of the mortgage origination list, Forbes has a review of U.S. Mortgage Originations that shows figures for banks like Wells Fargo, JP Morgan, Bank of America, U.S. Bancorp, and Citigroup.
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What is a Private Mortgage Banker?
You may have seen the term “private mortgage banker” on your bank’s website or services listing in a brochure. There is not really much difference with the job they do compared to other mortgage bankers. Some banks offer what they call private banking services to larger account holders, like a concierge service.
The Commercial Mortgage Bankers Association
A key resource for mortgage bankers is the Mortgage Bankers Association (MBA). The MBA is committed to providing their members “unmatched value and unparalleled benefits.” They provide an array of benefits, such as advocating on the behalf of their mortgage banker members in Washington D.C., and offering marketing resources.
The Mortgage Bankers Association is not only an excellent resource for the mortgage banker; it also has many consumer resources to help make home buying and find the perfect mortgage banker easier.
Some of the consumer tools offered by the Mortgage Banker Association include:
- A guide on preparing for the loan process
- A guide for evaluating your credit
- Information on shopping for a mortgage and the rules in effect
- Facts on the closing process
- A guide on planning for the unexpected
The tools and benefits offered to mortgage bankers are quite extensive. Here is a listing of the key offerings:
- Forecasts, data, reports, and surveys
- State Mortgage Market Profile
- Mortgage Banking magazine
- Conferences and meetings for networking
- Ongoing MBA education resources
- Daily/Weekly eNewsletters
- MBA Speakers Bureau
- Discounts with Freddie Mac and Fannie Mae
- Marketing resources
What Should I Look For When Choosing A Mortgage Banker?
Above all, you want to find a mortgage banker that you trust. A great way to find one that is trustworthy is to ask your realtor, family or friends. A personal referral means so much, and if a home mortgage banker or private mortgage banker has built up good word of mouth, that’s a key indicator you have found a decent one.
Find one associated with a bank or lender that you want to do business with. It won’t do you any good to be referred to a mortgage banker if they work for an institution that you don’t want to borrow from. If you have a long-term relationship with your bank, you may want to go there first. It’s a good idea to put together a list of potential banks you want to work with.
Don’t be afraid to change contacts if you’re not comfortable with them. The mortgage process can be complicated, so you want to be guided through it with a mortgage banker who communicates with you clearly and helps you understand each step of the process.
Mortgage Banker Reviews
In this day and age, you have many resources to do thorough research online before you choose a mortgage banker. Online reviews are a great place to go to research both lending institutions and mortgage bankers. You can often find out who has a good track record and who to stay away from.
Some good resources for researching home mortgage banker reviews are Glassdoor.com, Zillow.com, ConsumerAffairs.com, and the Better Business Bureau.
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Conclusion
Although focused on a single objective (helping homeowners finance their dream home), the job of a mortgage banker is widely varied and includes a combination of great people skills, mathematical and analytical skills, as well as some counseling, too.
Whether you work with a private mortgage banker through your bank’s service center or a home mortgage banker at another lending institution, you want to be sure to find one that you trust and feel good working with. There are many great mortgage bankers out there, so don’t be afraid to ask for referrals from friends and family.
If you are considering a career as a mortgage banker, remember that you don’t necessarily have to have a college degree to do well in this industry — just drive and determination. There are also some great resources out there to help you, like the Mortgage Bankers Association (MBA).
The bottom line is that, in most cases, mortgage bankers are the key person you will be dealing with when you apply for a mortgage loan or refinance a loan. Knowing more about their duties, the things a mortgage banker does to help homeowners, and the support they offer will give you a jump start on the loan process and help make it easier and a little less complicated.
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