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ARTICLES
Mortgage
Broker Plays an Important Role
To the best of my
knowledge, in no other city in Ontario, or even in Canada, do
mortgage brokers play such an important role in all aspects of
mortgage financing, than in the Ottawa area. Those who have had
dealings with brokers and their staff in the past will have some
idea of the broker's role in the mortgage transaction, but others
may still question what exactly brokers do, how they are regulated.
Why would someone use the services of a mortgage broker?
A mortgage
broker is an agent who brings borrowers and lenders together in
a mortgage transaction. Brokers are involved in residential mortgage
loans, interim financing for large projects, and bulk sale of
mortgages on the secondary market.
In residential
sales, a mortgage broker can play a vital role in assisting with:
- Financing unusual
properties
- Dealing with unique
circumstances which arise during the transaction
- Dealing with timing
difficulties
- Pre-approving the
purchaser for financing, thereby allowing him to make a cash offer,
rather than a conditional one
- Providing the best
rate, term, conditions, and prepayment privileges for the transaction
The broker has a wide
range of financial contacts and is aware of specialized packages and sources
of money, but performs a variety of services and functions:
- A broker will keep
informed and stay up-to-date on the policies, and requirements of various
institutional lenders, in order to provide current and accurate financial
advice.
- The broker will
conduct an interview with the borrower to determine the requirements
and flexibility that fit that borrower's needs.
- The broker will
contact the appropriate lender, outline the transaction and complete
the necessary documentation required - the loan application, salary
confirmation, proof of equity, financial information and credit evaluation.
- All documentation
is prepared and forwarded to the lender by the broker. He then becomes
directly involved in the negotiations to obtain the loan requested.
- Upon acceptance
of the loan by the lender, the broker will review the approval with
the borrower and explain the approval documents in detail. The borrower
must understand all the documents being signed.
- The broker will
continue to provide liaison between the lender and borrower right up
until the day of closing.
Mortgage brokers in
Ontario are regulated by the province under the terms of the Ontario
Mortgage Brokers Act, which is administered by the Ministry of
Financial Institutions. The Act requires that all mortgage brokers
be registered as such, and contains extensive provisions designed
to regulate the activities of mortgage brokers and protect the
public.
One of the
important provisions in the Act required that a mortgage broker
deliver a Statement of Mortgaged to the borrower at least 72 hours
(excluding Sundays and holidays), before they are asked to sign
the Mortgage Instrument or a Commitment to enter into the mortgage.
They may reduce the 72 hour period to 24 hours, but only if they
obtain Independent Legal Advice. This Statement of Mortgage is
a detailed form, indicating terms and conditions of the mortgage
and stipulating the costs involved, including the appraisal fee,
brokerage fee, mortgage insurance application fee and premium
and any other charges directly related to the mortgage transaction.
Most brokers
feel that if they can't find a way to save you money by way of
lower interest rates, better prepayment privileges, terms, conditions,
alternative financing, service or flexibility, they will probably
send you back to your own financial institution. Most brokers
depend upon repeat business from clients, solicitors, real estate
agents and even from the lending institutions who may refer deals
to brokers that do not meet their lending criteria, thus the broker
strives to maintain an excellent rapport with these contacts.
How to best
describe mortgage brokers? They are an independent mortgage money
traders, who are consumer and services oriented.
For further
information, please contact us at your
convenience.
GRG
Financial Services Inc.
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