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The profession that took the greatest hit to its reputation during the mortgage implosion that started in 2007 was mortgage brokering. Callous agents who had no interests at heart but their own pursuit of a paycheck became poster boys (most of them were men) for the excesses of the home financing catastrophe. In retribution, the mortgage broker industry was cut off by most major lenders, and thousands of agents left the business.

The truth, of course, was more nuanced. Brokers took a lot of the blame that should reasonably have been shared between all players, from borrowers themselves to the Wall Street “chop shops” that minced loans into assorted bits in a vain attempt to do away with risk. The problem today is that the baby has been thrown out with the financial bathwater. Mortgage brokers had a very important role to play in the home financing marketplace in keeping lenders honest by having them compete for the broker’s business, and giving smaller lenders access to the whole marketplace without having to invest in a sales force. In short, the good mortgage brokers gave consumers more choice and better prices than they could get on their own. Lenders have begun to realize this, and are selectively inviting reputable brokers to represent them again. With this positive development, it is time to take a fresh look at the value borrowers gain by working with a broker.

Hire a Smart Person to Help You
The key benefits offered by a mortgage broker are:

• -A shopping service: Borrowers let the broker/agent do the work sifting through all the possible loan options to find those that best fit the borrower’s particular needs.
• -Expertise: Good brokers keep themselves highly educated on marketplace developments. At a time when the U.S. Government is rolling out a myriad of incentives and special programs to either save homeowners from foreclosure or get them into a new home, it helps to have a pro guiding you through the research process.
• -A representative: Brokers represent you in dealing with the lender, and have counterparts at each one that is dedicated to keeping their business. They can run interference between you and the lender when pushing your application through the approval process. In short, they handle the grunt work for you, doing what they do best so that you can focus on what you do best (which is usually not applying for a home loan.)

The key cost is, of course, the broker fee. You will pay a percent or two to have the broker shop for you, do the paperwork for you and represent you in dealing with the lender.

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