Mortgage Broker

A mortgage broker is a licensed intermediary between borrowers and lenders. Unlike a bank loan officer who can only offer that bank's products, a mortgage broker has access to multiple lenders — including banks, credit unions, monoline lenders, and private lenders — and submits your application to find the best match. Broker services include: (1) Gathering your financial documents and preparing your application; (2) Submitting to multiple lenders simultaneously; (3) Comparing rates, fees, and product features across lenders; (4) Advising on loan type selection; (5) Coordinating through the approval and closing process. In Canada, mortgage brokers originate approximately 35–40% of all residential mortgages. See how to use a mortgage broker guide and CFPB — What is a mortgage broker?

In the US, mortgage brokers are typically paid via lender-paid compensation: the lender pays the broker a fee (typically 0.5%–2.75% of the loan amount) when the loan closes. This is called "yield spread premium" or lender-paid compensation. Alternatively, borrowers can pay the broker directly (borrower-paid compensation) — in which case, the rate may be slightly lower. RESPA and the Dodd-Frank Act prohibit dual compensation — a broker cannot be paid by both the lender and borrower on the same transaction. In Canada, mortgage brokers are almost always paid by the lender (called "finder's fee" or "procuration fee") — typically 0.5%–1.2% of the mortgage amount. Borrowers generally pay no direct fee for broker services in Canada. See CFPB — Broker vs. lender differences.

Both approaches have advantages. Use a broker when: (1) You have a complex financial situation (self-employed, multiple income streams, credit challenges); (2) You want access to multiple lenders without applying separately; (3) You're looking for the best possible rate across lenders; (4) You want guidance on loan type selection; (5) The property type is unusual (rural, mixed-use, non-warrantable condo). Go directly to a bank when: (1) You have an existing relationship that provides preferred pricing; (2) The bank offers a competitive rate confirmed through comparison; (3) You want a specific product only that bank offers; (4) You're doing an uncomplicated refinance with your existing lender. In Canada, going directly to a bank means you can only access that bank's products — a broker gives access to 30–50+ lenders. The majority of Canadian borrowers benefit from broker comparison. See how to choose a mortgage lender.

Canadian mortgage brokers are regulated at the provincial level: (1) Ontario: Financial Services Regulatory Authority of Ontario (FSRA) — Mortgage Brokerages, Lenders and Administrators Act (MBLAA); requires broker license, agent license; continuing education mandatory; (2) BC: BC Financial Services Authority (BCFSA) under the Mortgage Brokers Act; (3) Alberta: Real Estate Council of Alberta (RECA); (4) Saskatchewan: FCAA — Financial and Consumer Affairs Authority; (5) Other provinces: similar provincial regulators. Key requirements: disclosure of compensation, suitability obligations, anti-money laundering (FINTRAC) compliance. FSRA Ontario has enhanced broker conduct rules and private mortgage disclosure requirements. See FSRA Ontario — Mortgage brokering.

A mortgage loan officer (MLO) works for a specific bank, credit union, or mortgage company — they can only offer products from their employer. They are employees or agents of the lender. A mortgage broker is an independent intermediary who works with multiple lenders. Both must be licensed under NMLS (Nationwide Mortgage Licensing System) in the US. Key distinction: an MLO's duty is to the lender; a broker's duty should be to the borrower. However, be aware that broker compensation from lenders creates inherent incentives — ask brokers to disclose all lender compensation to ensure you're getting the best rate, not just the loan that pays the broker most. In Canada, "mortgage broker" is the umbrella term; "mortgage agent" (Ontario) is a licensed professional working under a brokerage. See CFPB — Mortgage broker vs. lender.