Welcome or Register
Back to Table of Contents

Types of Mortgage Lenders

Mortgage Bankers

Mortgage Bankers are lenders that are large enough to originate loans and create pools of loans, which are then sold 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.

Some companies don’t sell directly to those major investors, but sell their loans to the mortgage bankers. They often refer to themselves as mortgage bankers as well. Since they are actually engaging in the selling of loans, there is some justification for using this label. The point is that you cannot reliably determine the size or strength of a particular lender based on whether or not they identify themselves as a mortgage banker.

Portfolio Lenders

An institution that lends their own money and originates loans for itself is called a portfolio lender. This is because they are lending for their own portfolio of loans and not worried about being able to immediately sell them on the secondary market. Because of this, they don’t have to obey Fannie/Freddie guidelines and can create their own rules for determining credit worthiness. Usually these institutions are larger banks and savings & loans.

Quite often only a portion of their loan programs are a portfolio product. If they are offering fixed rate loans or government loans, they are certainly engaging in mortgage banking as well as portfolio lending.

Once a borrower has made the payments on a portfolio loan for over a year without any late payments, the loan is considered seasoned. Once a loan has a track history of timely payments it becomes marketable, even if it does not meet Freddie/Fannie guidelines.

Selling these seasoned loans frees up more money for the portfolio lender to make additional loans. If they are sold, they are packaged into pools and sold on the secondary market. You will probably not even realize your loan is sold because, quite likely, you will still make your loan payments to the same lender, which has now become your servicer.

Direct Lenders

Lenders are considered to be direct lenders if they fund their own loans. A direct lender can range anywhere from the biggest lender to a very tiny one. Banks and savings & loans obviously have deposits with which they can fund loans, but they usually use warehouse lines of credit for drawing the money to fund the loans. Smaller institutions also have warehouse lines of credit from which they draw money to fund loans.

Direct lenders usually fit into the category of mortgage bankers or portfolio lenders, but not always.

Correspondents

Correspondent is usually a term that refers to a company that originates and closes home loans in their own name, then sells them individually to a larger lender, called a sponsor. The sponsor acts as the mortgage banker, re-selling the loan to Ginnie Mae, Fannie Mae, or Freddie Mac as part of a pool. The correspondent may fund the loans themselves or funding may take place from the larger company. Either way, the sponsor usually underwrites the loan.

It is almost like being a mortgage broker, except that there is usually a very strong relationship between the correspondent and their sponsor.

Mortgage Brokers

Mortgage Brokers are companies that originate loans with the intention of brokering them to lending institutions. A broker has established relationships with these companies. Underwriting and funding takes place at the larger institutions. Many mortgage brokers are also correspondents.

Mortgage brokers deal with lending institutions that have a wholesale loan department.

Wholesale Lenders

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.

Banks and savings & loans usually operate as portfolio lenders, mortgage bankers, or some combination of both.

Credit Unions usually seem to operate as correspondents, although a large one could act as a portfolio lender or a mortgage banker.

Back to Table of Contents

Thank you for visiting today. If this is your first visit, take your time and look around. We have plenty of information and resources available to you. If you are a return visitor, thank you. We would love to hear from you. We can serve all your real estate needs.

Quick Search


view all


Any

Any

No Min.

No Max.

Testimonials Page

Hello Janet, I just want to send a short note to thank you for your assistance in my purchasing the Lacey Street home. As you are aware, Gary and I had significant problems in finding a "qualified" real estate agent. When we found you, you made everything so easy..........you were very prepared.........you went way out of your way to assist us, even after the property was purchased. Things could not have gone smoother. Thank you for everything you have done. Mark Madding
Janet, My husband and I would like to extend our heart felt thanks to you for selling our home in Glen Lakes. We had previously listed the property without success. You provided us the necessary information to appropriately price our home and the home sold in a record 17-day period. We were thrilled with your results and would highly recommend your services to our friends. Thanks again so very much for your attention to detail and immediate success in selling our home. Kindest regards, Kevin and Natale Goff
Virginia, You went above & beyond to help make our dreams come true, making our first reality a paradise! to the first potential "yes" homes to home you were with us every step of the way. You truly do make miracles happen. Thank You for all of the prayers. Thank you from the bottom of our hearts. Brenda and Billy Lummus
Thank you for the efficient and speedy way you handled the sale of my house in Glen Lakes. Although I never met you, I feel as though I've made a new friend. I could tell in our phone conversations that you had my best interests at heart and worked quickly to find a buyer who was just right for my home. Your friendliness and the way you kept me informed about the way things were going impressed me. I really appreciate the promptness of the finalizing and your willingness to help make details clear to me. May God bless you with good health, success and prosperity in the future. It was a joy to work with you, my friend! Sincerely, Mona FayeLewis
View All

Thank you for visiting today. If this is your first visit, take your time and look around. We have plenty of information and resources available to you. If you are a return visitor, thank you. We would love to hear from you. We can serve all your real estate needs.