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A mortgage broker is an intermediary that helps lenders market their loans to borrowers.
They could be viewed like a shopping center for home loans. Or maybe like a travel agency which helps airlines sell flight tickets to travelers.
What brokers do is tie-up with multiple mortgage lenders so that they have a whole basket of loans for borrowers to choose from.
This don’t just enable a borrower to choose one with the best rates and terms, it also plays an important role when someone has problem getting a loan approved.
For example a home buyer might be turned away by a traditional lender. But a broker would almost certainly be able to help the same borrower identify a lender who would have no qualms approving his loan.
There are many advantages of using brokers instead of going direct to lenders for home loans. But borrowers also need to be cautious when working with them.
Because of the wide reach of private mortgage brokers, they can cause a lot of trouble when they operate in bad faith.
While the financial crisis of 2008 was largely blamed on sub-prime mortgages which predatory lenders issued, brokers also played a part is distributing them nationwide.