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Portfolio lenders are usually Savings & Loan institutions,
and sometimes banks. They are called "portfolio" lenders
because they tend to originate loans for their own portfolio
(usually adjustable rate loans), not for resale in the secondary
market. The distinction gets blurred because most portfolio
lenders also engage in mortgage banking.
They will often pay more compensation to their loan
officers for originating a portfolio product than for originating
a fixed rate loan. You may also find that they are not
as competitive as mortgage bankers and brokers in the fixed
rate loan market, though this is no longer a hard and fast
rule.
It is often easier to qualify for a portfolio loan, so they
are often a lender of "second resort" for those
who cannot qualify for a fixed rate loan. If a loan
officer is steering you towards "sub-prime" loans,
it might be wise to check out a portfolio lender first.
Portfolio lenders also can serve as "niche" lenders
because certain things are more important to them than meeting
the more standardized underwriting guidelines of a mortgage
banker. An example would be a savings & loan which
is more concerned with an individual's savings history than
being able to fully document income.
If you apply for a loan with a portfolio lender and you
are declined, that's it. You're done. If you still
think you should be able to qualify for a loan, you have
to start over somewhere else.
Their major strength is that you will recognize their name. Banks
and Savings & Loans often operate as portfolio lenders,
but as the lending world has changed, most also operate as
mortgage bankers and sometimes brokers.
 Mortgage
Bankers
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copyright 2000 by Terry Light and
RealEstate ABC
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