A mortgage broker is the one who acts as an intermediary who brokers mortgages loans, on the behalf of individuals and business houses. Traditionally, this work is done by banks and lending institutions.
The need for brokers is growing rapidly as there are so many people who want mortgage loans. This makes the role of a mortgage broker necessary. And it is becoming popular day by day.
Today there are several developed countries such as U.K, Australia, Canada, Spain, New Zealand and U.S where mortgage broker industry is becoming very competitive as here mortgage brokers have become the largest sellers of mortgage products for bestower.
These brokers are regulated to follow various compliances such as law related to banking sectors, economic sector and other related laws.
Because of increasing demands and the need to follow compliance, government has put on certain requirements that must be followed by every mortgage broker before entering into the mortgage industry.
Following are requirements that are needed to follow for the mortgage brokerage industry:
Business houses that promote Syndicated Mortgage Investments need to be licenced: – A lot had been experienced for a while that there are many business houses that are into promoting Syndicate Mortgage Investment without having any license under MBLLA. Moreover, they are also been providing information on different matters regarding syndicate mortgage investments. This is something that should happen. Under the MBLLA guideline, each and every business houses that are promoting syndicate investment mortgage shall get a licence as mortgage brokers before indulging themselves into the same.
Additionally, even the Businesses are not actually promoting syndicate mortgage investment in real sense but are involved in the transactions closed by licensed mortgage brokerage and also in the transactions they are promoting the investments in which licensed mortgage brokers are required should get themselves registered under MBLLA.
Conduct Due-Diligence: – Every licenced broker needs to conduct their due-diligence. This Due-Diligence is conducted as per the bulletin under MBLLA. According to this bulletin, a due-diligence must be carried out by every licensed mortgage broker in order to ensure that either all the products offered by the mortgage broker are suitable for investors or not.
Lender or investor disclosure statement: – Investors or lender disclosure statement is also a prime concern for FSCO’s Investor or lender disclosure statement. This is initiated to ensure that there will be adequate and sufficient disclosure to investors.
Checklist for disclosing and avoiding fraud: – A new checklist is also prepared by FSCO, which will especially going to look at the best practices and guidance for combating and preventing mortgage fraud. This will going to be a very powerful tool for fraud prevention.
Audit of Mortgage-brokers: – There is a risk-based approach that FSCO uses which is totally focussed on providing a managerial resource to those areas that have a greater risk. Down the line, FSCO goes beyond just completing requirements set out in legislation. Under this, FSCO shifts its concern from examining risks to more important issues such as focusing its attention towards those risks that have higher degree of risks involved in it.
The only reasons why this is implemented is that: Compliance cost can be decreased and regulatory resources can be increased.