Who Regulates Mortgage Brokers and How Are They Overseen?

Mortgage brokers help borrowers find home loans, but their role comes with regulatory oversight to ensure fair practices. Without proper supervision, unethical behavior—such as hidden fees or steering borrowers toward unfavorable loan terms—can occur.

Various authorities oversee mortgage brokers at both the federal and state levels. Understanding who regulates them helps consumers make informed decisions and report concerns when necessary.

Federal Agencies

Several federal agencies enforce consumer protection laws and financial regulations for mortgage brokers. The Consumer Financial Protection Bureau (CFPB) enforces the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), which require brokers to disclose loan terms, fees, and potential conflicts of interest. The CFPB also investigates consumer complaints and takes action against brokers who violate regulations.

The Federal Trade Commission (FTC) monitors deceptive advertising and fraudulent lending practices. Brokers must not mislead borrowers about loan terms, interest rates, or approval guarantees. The FTC has taken legal action against those who engage in false advertising or fail to disclose critical loan details.

The Nationwide Multistate Licensing System & Registry (NMLS) serves as a centralized platform for licensing mortgage brokers. Federal law requires brokers to register with the NMLS, which tracks licensing status, disciplinary actions, and background information. This system helps regulators and consumers verify whether a broker is properly licensed.

State Oversight

Each state sets its own licensing requirements, compliance standards, and enforcement mechanisms. State financial regulators, often within departments of banking or financial services, ensure brokers follow local laws. Licensing criteria typically include background checks, education requirements, and exams. Some states also mandate continuing education to keep brokers informed about regulatory changes.

State regulators conduct audits and examinations to verify that brokers follow proper lending procedures and disclose all relevant loan details. These reviews check whether brokers charge lawful fees, maintain accurate records, and provide necessary disclosures. Regulators also investigate consumer complaints and can impose fines, revoke licenses, or take legal action against brokers who engage in misconduct.

Some states impose additional consumer protection measures, such as limits on broker fees or requirements for written agreements outlining the broker’s role and compensation. For example, certain states cap the percentage a broker can earn from a loan to prevent excessive charges.

Reporting Concerns to Authorities

If a mortgage broker engages in dishonest or unethical behavior, reporting the issue can help prevent further harm. Consumers who suspect misconduct, such as undisclosed fees or pressure to accept unfavorable loan terms, should gather relevant documentation, including loan estimates, closing disclosures, emails, and written agreements.

State financial regulators are often the first point of contact for filing a complaint. Many states provide online portals where consumers can submit grievances with supporting documents. These agencies review complaints to determine whether a broker has violated regulations and may take enforcement actions if necessary. Some states also have consumer protection divisions that assist borrowers in resolving disputes.

For issues involving misleading advertising, fraudulent loan offers, or violations of consumer protection laws, filing a complaint with the Federal Trade Commission (FTC) can prompt action. The FTC collects reports through its website and works with law enforcement agencies to investigate patterns of misconduct. In cases where a broker’s actions involve discrimination or unfair lending practices, the Department of Housing and Urban Development (HUD) may also be an appropriate avenue for reporting concerns.