UK Accounting Glossary
A mortgage broker is an individual or company that unites borrowers and lenders for the intent of originating loans or mortgages. The mortgage broker, however, does not take part either in the originating process nor service the mortgages the broker has functioned as an intermediary. The broker may also talk terms with the lender to strive for best financing deal possible with respect to the borrower.
The mortgage broker may derive his income from an origination fee and may also include a yield spread premium from the lender. The mortgage funds are lent exclusively in the name of the mortgage lender.
A loan officer is a person who assists borrowers in taking loans. Loan officers are usually representatives of credit unions and banks. Loan underwriters are specialized loan officers who examine and assess potential borrowers’ creditworthiness. They are entrusted with the task to determine if the probable borrower is eligible for a loan. Loan officers generally facilitate mortgage or consumer loans.
The process that a mortgage lender must go through to create a mortgage. The mortgage is secured by some amount of mortgagor’s real property. Mortgage terms like interest rates and loan amounts are determined and participants of the business transaction are legally bound at the origination stage.
The type of mortgage loans that have been meshed with a mortgage originator by mortgage brokers and borrowers. The specified loan will stay with the originator until it is sold in the secondary mortgage market or until it is placed in the loan portfolio of the originator. Mortgage pipeline is generally used to hedge against movements in interest rates.
Predatory lending is the term given to unscrupulous actions carried out by lenders to tempt and help a borrower in taking a mortgage that bears abnormally high fees or positions the borrower in a lower credit-rated loan that benefits the lender. A majority of countries have strict anti-predatory lending laws.
Because a large mortgage broker handles numerous loans, they may be able to get a better interest rate for a prospective homebuyer.
The mortgage broker. assured him that he would be able to get a loan, but when he checked directly with the bank, they told him that his credit rating was too low.
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This glossary post was last updated: 15th February 2020.