While the recent sub-prime lending crisis has trained a spotlight on practices by mortgage lending companies, the individuals called mortgage brokers are not all subject to scrutiny by any government agency.

There are two kinds of lenders: mortgage bankers, who work for actual banks, and mortgage brokers who serve both the lending company and/or bank and the consumer, or home buyer.

The National Association of Mortgage Brokers (NAMB) defines a mortgage brokers as “an independent real estate financing professional who specializes in the origination of residential and/or commercial mortgages. A mortgage broker is also an independent contractor who markets and originates loans offered by multiple wholesale lenders.”

The Mortgage Bankers Association stresses that a broker is “defined as ‘a person (not an employee or exclusive agent of a lender) who brings a borrower and lender together.’” In contrast, this association says “it is well understood that a mortgage banker is essentially a vendor looking to sell a mortgage at a price that is both competitive and profitable.”

Both industry groups note that what home buyers may not realize is that a mortgage broker does not work exclusively for the buyer or the company that underwrites the loan. As the go-between, brokers are allowed by law to collect fees from both the lending company and the home buyer.

More Mortgages for Homes Arranged by Brokers than Bankers

In the United States more than half the mortgage loans are made by mortgage brokers. According to an article on bankrate.com, “Brokers often boast that they have access to a broader range of loan programs because they work with multiple lenders.”