Note: The following was written by Larry Rubinoff, branch manager of a Clearwater Beach, Florida office of Amstar Mortgage.

When you apply for a loan, who takes your application? What role does that person play? Who does the person represent–you or the lender? What’s the difference between a mortgage broker, a loan officer, a loan originator, and a lender? For many consumers, the answers to these questions are a complete mystery.

First, let’s examine the title and the role that each of the various people play in providing mortgage loans:

• Lender: The lender is the person or institution that ultimately provides the money used to purchase the property. In the past, this was typically a bank, credit union, or savings and loan (S&L) that loaned out money that was deposited by its customers. Now, the term “lender” can also be applied to investors who purchase securities backed by mortgages.
• Mortgage broker: A mortgage broker is a person who acts as a middleman between the lender and the borrower. The mortgage broker typically has a selection of mortgages from a variety of lenders to offer to clients. The primary job of the mortgage broker is to match the borrower to a lender whose guidelines fit the borrower’s situation. The broker takes your loan application, gathers essential documents (such as tax returns and paycheck stubs), structures the loan, and then presents it to a lender. If the borrower accepts the terms of the loan as offered by the lender, the borrower is then dealing through the mortgage broker with the lender. The mortgage broker is paid on commission that can come either from the borrower, the lender or both, but the broker is expected to help borrowers secure mortgage loans that best meet their needs and are affordable. Mortgage brokers are also called loan officers, although loan officers are not always brokers.
• Loan officer: A loan officer takes your loan application, gathers essential documents (such as tax returns and paycheck stubs), structures the loan, and then presents it to the lender that they work for. A loan officer is “usually” an employee of a bank, savings and loan, or other lending institution. The loan officer is also paid a commission that can come from either the borrower, their employer/lender, or both, the same as the mortgage broker.
• Loan originator: Anyone who takes your application and advises you on your mortgage loan is a loan originator, even if the institution for which the person works allows them to “broker” the loan to another lender and even if the person is a licensed mortgage broker. The term “loan originator” is a more generic term for mortgage broker and loan officer.

Note: Mortgage brokers, loan officers, loan originators, and all salespeople, for that matter, who achieve long-term success are dedicated to serving the needs of their clients. The people who cause problems are the ones who typically enter the industry for short-term gain.

Although loan originators may, in some circumstances, (this can vary by state) have a fiduciary responsibility to the lenders who supply the products (mortgages) they sell, to be successful, they need to provide their clients (the borrowers) with affordable mortgages that best meet their needs and qualifications. When they achieve this goal, everyone wins–the lender, the borrower, and the loan originator.

Borrowers often become confused, because well-intentioned “experts” provide them with the wrong advice. These “experts” often offer misleading suggestions such as the following:

• “Go to the loan officer not to the broker”
• “The broker can serve you better then the loan officer”
• “Go to your bank not the mortgage broker”

The fact is that titles matter very little. A mortgage broker who has access to a diversity of mortgage loans may be able to give you a much better deal than your local bank is offering. A highly qualified loan officer may be more knowledgeable than a particular broker. As a consumer, you need to pick the individual whom you trust and with whom you feel most comfortable. Ask friends, family members, and colleagues for recommendations. Interview at least three loan originators and check their references. Don’t worry so much about the person’s title.

Too often in our society we rely on a person’s title alone to indicate competence. This is not a useful approach with all professionals whose services you seek.

You also have the right to seek legal advice during the entire process and be represented by an attorney (whose competence you have verified, as well). You need not only take the word of the lender, loan officer, loan originator or mortgage broker. Caveat emptor! (Buyer beware!)