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It used to be fairly easy to put a term to a lender that
accurately described them and the types of mortgages they
originated. Time, the S&L problems more than a decade
ago, and a maturing marketplace have served to "blend" those
differences. Some old adjectives barely apply now and
are rarely used.
A true Mortgage Banker is a lender that is large enough
to originate loans and create pools of loans which they sell
directly to Fannie Mae, Freddie Mac, Ginnie Mae, jumbo loan
investors, and others. Any company that does this is considered
to be a mortgage banker. They can very greatly in size. Some
may service the loans they originate, but not all of them
will. Most true mortgage bankers have wholesale lending
divisions.
Examples of two of the largest mortgage bankers are Countrywide
Home Loans and Wells Fargo Mortgage. One is associated
with a bank and the other is not, but both are most correctly
classified as mortgage bankers.
A lot of companies call themselves mortgage bankers and
some deserve the title. For others, it is mostly marketing.
Mortgage Brokers are companies that originate loans with
the intention of brokering them to wholesale lending institutions.
A broker has established relationships with these companies. Underwriting
and funding takes place at the wholesale lender. Many mortgage
brokers are also correspondents, which is why many of them
also claim to be mortgage bankers.
Mortgage brokers deal with lending institutions that have
a wholesale loan department.
Most mortgage bankers and portfolio lenders also act as
wholesale lenders, catering to mortgage brokers for loan
origination. Some wholesale lenders do not even have their
own retail branches, relying solely on mortgage brokers for
their loans.
These wholesale divisions offer loans to mortgage brokers
at a lower cost than their retail branches offer them to
the general public. The mortgage broker then adds on his
fee. The result for the borrower is that the loan
costs about the same as if he obtained a loan directly from
a retail branch of the wholesale lender.
 Portfolio
Lenders, Banks, S&L's, Direct Lenders & Correspondents
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to Mortgage Articles & Advice
copyright 2000 by Terry Light and
RealEstate ABC
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