Types of Mortgage Lenders

Mortgage bankers are lenders that are 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. Companies that do this are considered to be a mortgage banker. They can very greatly in size. Some service the loans that they originate but others do not. Many companies call themselves mortgage bankers and while some deserve the title, others do not.

Mortgage brokers are companies that originate loans with the intention of brokering them to wholesale lending institutions. A broker has established relationships with these lending 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.

Wholesale lenders cater 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.

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