Chapter 18 Flashcards
Mortgage Banker
A company, individual or institution that originates mortgages. Mortgage bankers use their own funds, or funds borrowed from a warehouse lender, to fund mortgages.
Mortgage Broker
An intermediary who brings mortgage borrowers and mortgage lenders together, but does not use its own funds to originate mortgages. A mortgage broker gathers paperwork from a borrower, and passes that paperwork along to a mortgage lender for underwriting and approval. The mortgage funds are then lent in the name of the mortgage lender. A mortgage broker collects an origination fee and/or yield spread premium from the lender as compensation for its services.
Pre-approval
An evaluation of a potential borrower by a lender that determines whether the borrower qualifies for a loan from the lender, or the maximum amount that the lender would be willing to lend.
Pre-qualification
A process whereby a loan officer takes information from a borrower and makes a tentative assessment of how much the lending institution is willing to lend them.
Pre-application and Fee Agreement
A form used between mortgage brokers or mortgage bankers and a home buyer that provides certain disclosures prior to the application of a mortgage.
Mortgage Broker Dual Agency Disclosure Form
A banking department form required when a person is acting as a mortgage broker and a real estate broker in the same transaction.
Mortgage Commitment
A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a house.
Lender Rebate
A payment to a mortgage broker by a lender.
Non-conforming Loan
A loan that fails to meet bank criteria for funding
Rate Lock
An agreement between a borrower and a lender that allows the borrower to lock in the interest rate on a mortgage over a specified time period at the prevailing market interest rate.
Underwriting
The process by which a lender decides whether a potential creditor is creditworthy and should receive a loan.
