Mortgage bankers are instrumental in helping consumers with all aspects of mortgage services, including the application process. They also safeguard the interests of the bank by vetting qualified consumers before issuing mortgages. Ultimately, their goal is to find qualified borrowers, which are typically those who pose the least financial risk for the institution.
Mortgage bankers are similar to loan officers. They specialize in overseeing and offering financing for borrowers to refinance previous mortgages or to buy a new home. Loan officers are always on the hunt for qualified borrowers and some may therefore attend social gatherings where borrowers may be present, such as home-buying seminars and real estate meetings.
While banks work under strict federal regulation during the lending process, they also have some freedom in screening applicants. As an example, according to federal law, an individual’s marital status cannot factor into the loan making decision, but a loan officer is free to reject individuals who apply for a loan if those individuals have credit scores that don’t meet the financial institution’s score requirements.
As a result, mortgage bankers must be diligent in following regulations, careful with details, and possess significant customer service skills.
Mortgage bankers have a variety of responsibilities associated with loans. They play an active and crucial role in the verification process. Bankers must verify salary, employment status, credit history, and a variety of other financial factors before issuing a loan. This is done to keep risks low for the financial institution: applicants who meet these qualifications are considered to be more trustworthy than those who do not, providing greater confidence that they will repay their loans on time and in full.
Loan officers must also pay close attention to paperwork. They ensure that applicants correctly fill out all documentation and bankers field any questions that an applicant may pose during the loan process. Loan officers must also be capable of operating underwriting software, an industry standard in today’s digital age that yields far quicker results and greater efficiency than yesterday’s analogue approaches.
Good-Faith Estimates (GFEs) and Declined Applications
The federal Real Estate Settlement Procedures Act (RESPA) went into effect in 1974. It requires that loan officers produce a good-faith estimate (GFE) for applicants. These estimates provide a report of any and all fees that applicants may experience during the loan process, including appraisal fees and credit report fees.
Providing a GFE isn’t necessary for rejected applications. In the event that an application is declined, loan officers must explain why the rejection occurred in writing. There are a variety of reasons why an application may be declined: for example, an applicant may carry more debt than the financial institution allows, or a home may be appraised at a lower value than the applicant’s requested mortgage.
However, as mentioned before, federal restrictions play an important role: banks cannot, for example, reject an application due to concerns that an institution may have about the demographics of the area where a home is located.