A mortgage broker works with many banks and generally has more programs than a single bank who’s officers just use the bank’s mortgage programs. So it sounds like you should go with a mortgage broker huh, well maybe. Some banks charge a premium to programs giving to brokers and thus a broker may not have the best deal. The best advise is to shop around.
is a person that has no money of his own to lend, is signed up with approved by as many lenders as he wants to fund the loans he presents to the lenders that meet their criteria.
B. Correspondent Lender
This person could have a line of credit with a certain lending institution that allows him a little latitude in the lending process. The loans that he submit to this institution must meet their criteria and approval before funding or at least very shortly after funding. Some in the industry call this table top funding. This person can also act as a mortgage broker and is in most cases.
C. Bank
This critter can lend his own funds and pretty much decide what he will do with a loan. In niney-nine percent of the cases they stay within FNMA guidelines (Big Investor that purchase loans) so the loans they fund can be sold at a moments notice in order to get more funds in their bank so they can do more loans. They have the ability to also stray from the strict criteria but seldom do and hold a loan in their system for a period of time after which they can sell the loan to FNMA.
No one holds any more advantage over the other. A mortgage broker might be signed up with that very bank you are attempting to get your loan from. Because he has many lenders across the spectrum he is able to decide the best avenue to place your loan
where it will have more success of funding.
The correspondent lender might try and force your loan into his narrow criteria of his correspondent, even though he might have access to other lenders or banks.
The Banks have their criteria and will very seldom stray from it. They are in the business to do a certain type loan, stay within the guidelines so there will be little or no problems down the line.
Closing cost and interest will vary from loan to loan. Each loan stands on it’s own merit.
I think you are asking if there is a difference in the interest in getting a loan from either one. The short answer is there really is not that much of a difference if any at all.
The real answer is which ever is the one that get you what you want will charge you accordinly. If you have excellent credit and go to a bank you will be quoted a rate, I am willing to bet that your friendly mortgage broker will be able to match it, or some way pay for a credit report and appraisal that will make his offer just as attractive.
The mortgage broker might even out hustle the bank with great service. He don’t get paid until the loan fund, where as the loan officer at the bank is gonna get paid if he does no loans or 50 loans and will be at his kitchen table eating at 5:30 PM every evening.
The mortgage broker would be at your house getting loan docs signed at that time
I hope this has been of some use to you, good luck
The lender is the one who provides the money to the borrower at the closing table. In exchange, the lender receives a note evidencing the borrower’s debt and obligation to repay, plus a lien on the subject property.
Mortgage brokers do not lend. They are independent contractors who offer the loan products of multiple lenders, called wholesalers.
A broker finds potential customers and counsels them on the loans available from different lenders. They also counsel on any problems involved in qualifying for a loan, including credit problems, take the borrower’s application, and usually process the loan. Processing includes compiling the file of information about the transaction, including the credit report, appraisal, verification of employment and assets, and so on. When the file is complete, it is handed off to the lender, who funds the loan.
Lenders who perform all the loan origination functions themselves are called “retail lenders”. Lenders who have certain functions performed for them by mortgage brokers are called “wholesale lenders”. Many large lenders have both retail and wholesale divisions.
The term “direct lender” is one that small lenders sometimes use to distinguish themselves from mortgage brokers.
Loan officers are employees of lenders or mortgage brokers. Loan officers find, sell and counsel customers, and take applications. Loan officers employed by mortgage brokers may also be involved in loan processing. In the case of a one-person mortgage broker firm, that person is both the broker and the loan officer.
While loan officers are employees, they act more like independent contractors. They are compensated largely, if not entirely, on a commission basis. The typical commission rate is 1/2 of 1% of the loan amount, and successful loan officers earn 6 figure incomes.
Both lenders and mortgage brokers post prices with loan officers to be offered to consumers. The loan officers usually have limited discretion to reduce the price if necessary to meet competition, and full discretion to raise the price if they can. The difference between the posted price and the price charged the consumer is called an “overage”, and it is usually shared with the loan officer.
Reasonably astute shoppers will probably do better dealing with a mortgage broker than with a lender. Because mortgage brokers deal with multiple lenders, they can shop for the best terms available on any given day. In addition, they can find the lenders who specialize in various market niches that many other lenders avoid, such as loans to applicants with poor credit ratings. On the other hand, the risk of encountering a rogue who will trick you into paying more than you should is higher among mortgage brokers than among lenders.
Lenders are further distinguished as “mortgage bankers” or “portfolio lenders.” Mortgage bankers sell all the loans they make in the secondary market because they don’t have the long-term funding sources necessary to hold mortgages permanently. They fund loans by borrowing from banks or by selling short-term notes, repaying when the loans are sold.
Mortgage banks now dominate the US market. Of the 10 largest lenders last year, 9 were mortgage banks and only one was a portfolio lender. However, many of the large mortgage banks, such as Chase Manhattan Mortgage and Wells Fargo Mortgage, are affiliated with large commercial banks.
Portfolio lenders include commercial banks, savings banks, savings and loan associations, and credit unions. They are sometimes referred to as “depository institutions” because they offer deposit accounts to the public. Deposits provide a relatively stable funding source that allows these institutions to hold loans permanently in their portfolios. Washington Mutual, a savings bank, is the only depository on the list of the 10 largest mortgage lenders.
Mortgage banks often offer better terms on fixed-rate mortgages than portfolio lenders, while the reverse is more likely for adjustable rate mortgages. It would be a mistake to place too much reliance on this rule, however, because the variability within each group is very wide.
4 Responses to re: mortgage lending- What is the difference between a mortgage broker, correspondent lender , and bank. ?
RN
February 1st, 2010 at 5:26 am
A mortgage broker works with many banks and generally has more programs than a single bank who’s officers just use the bank’s mortgage programs. So it sounds like you should go with a mortgage broker huh, well maybe. Some banks charge a premium to programs giving to brokers and thus a broker may not have the best deal. The best advise is to shop around.
REALTOR Marc Pun
February 1st, 2010 at 5:52 am
No, it all boils down to your credit score, income, debt and money down. Shopping around is the best want but very time consuming. Good luck.
Skip
February 1st, 2010 at 5:56 am
In Answer to your question pretty much a
A. Mortgage broker
is a person that has no money of his own to lend, is signed up with approved by as many lenders as he wants to fund the loans he presents to the lenders that meet their criteria.
B. Correspondent Lender
This person could have a line of credit with a certain lending institution that allows him a little latitude in the lending process. The loans that he submit to this institution must meet their criteria and approval before funding or at least very shortly after funding. Some in the industry call this table top funding. This person can also act as a mortgage broker and is in most cases.
C. Bank
This critter can lend his own funds and pretty much decide what he will do with a loan. In niney-nine percent of the cases they stay within FNMA guidelines (Big Investor that purchase loans) so the loans they fund can be sold at a moments notice in order to get more funds in their bank so they can do more loans. They have the ability to also stray from the strict criteria but seldom do and hold a loan in their system for a period of time after which they can sell the loan to FNMA.
No one holds any more advantage over the other. A mortgage broker might be signed up with that very bank you are attempting to get your loan from. Because he has many lenders across the spectrum he is able to decide the best avenue to place your loan
where it will have more success of funding.
The correspondent lender might try and force your loan into his narrow criteria of his correspondent, even though he might have access to other lenders or banks.
The Banks have their criteria and will very seldom stray from it. They are in the business to do a certain type loan, stay within the guidelines so there will be little or no problems down the line.
Closing cost and interest will vary from loan to loan. Each loan stands on it’s own merit.
I think you are asking if there is a difference in the interest in getting a loan from either one. The short answer is there really is not that much of a difference if any at all.
The real answer is which ever is the one that get you what you want will charge you accordinly. If you have excellent credit and go to a bank you will be quoted a rate, I am willing to bet that your friendly mortgage broker will be able to match it, or some way pay for a credit report and appraisal that will make his offer just as attractive.
The mortgage broker might even out hustle the bank with great service. He don’t get paid until the loan fund, where as the loan officer at the bank is gonna get paid if he does no loans or 50 loans and will be at his kitchen table eating at 5:30 PM every evening.
The mortgage broker would be at your house getting loan docs signed at that time
I hope this has been of some use to you, good luck
“FIGHT ON”
orlandomortgagebroker
February 1st, 2010 at 6:52 am
The lender is the one who provides the money to the borrower at the closing table. In exchange, the lender receives a note evidencing the borrower’s debt and obligation to repay, plus a lien on the subject property.
Mortgage brokers do not lend. They are independent contractors who offer the loan products of multiple lenders, called wholesalers.
A broker finds potential customers and counsels them on the loans available from different lenders. They also counsel on any problems involved in qualifying for a loan, including credit problems, take the borrower’s application, and usually process the loan. Processing includes compiling the file of information about the transaction, including the credit report, appraisal, verification of employment and assets, and so on. When the file is complete, it is handed off to the lender, who funds the loan.
Lenders who perform all the loan origination functions themselves are called “retail lenders”. Lenders who have certain functions performed for them by mortgage brokers are called “wholesale lenders”. Many large lenders have both retail and wholesale divisions.
The term “direct lender” is one that small lenders sometimes use to distinguish themselves from mortgage brokers.
Loan officers are employees of lenders or mortgage brokers. Loan officers find, sell and counsel customers, and take applications. Loan officers employed by mortgage brokers may also be involved in loan processing. In the case of a one-person mortgage broker firm, that person is both the broker and the loan officer.
While loan officers are employees, they act more like independent contractors. They are compensated largely, if not entirely, on a commission basis. The typical commission rate is 1/2 of 1% of the loan amount, and successful loan officers earn 6 figure incomes.
Both lenders and mortgage brokers post prices with loan officers to be offered to consumers. The loan officers usually have limited discretion to reduce the price if necessary to meet competition, and full discretion to raise the price if they can. The difference between the posted price and the price charged the consumer is called an “overage”, and it is usually shared with the loan officer.
Reasonably astute shoppers will probably do better dealing with a mortgage broker than with a lender. Because mortgage brokers deal with multiple lenders, they can shop for the best terms available on any given day. In addition, they can find the lenders who specialize in various market niches that many other lenders avoid, such as loans to applicants with poor credit ratings. On the other hand, the risk of encountering a rogue who will trick you into paying more than you should is higher among mortgage brokers than among lenders.
Lenders are further distinguished as “mortgage bankers” or “portfolio lenders.” Mortgage bankers sell all the loans they make in the secondary market because they don’t have the long-term funding sources necessary to hold mortgages permanently. They fund loans by borrowing from banks or by selling short-term notes, repaying when the loans are sold.
Mortgage banks now dominate the US market. Of the 10 largest lenders last year, 9 were mortgage banks and only one was a portfolio lender. However, many of the large mortgage banks, such as Chase Manhattan Mortgage and Wells Fargo Mortgage, are affiliated with large commercial banks.
Portfolio lenders include commercial banks, savings banks, savings and loan associations, and credit unions. They are sometimes referred to as “depository institutions” because they offer deposit accounts to the public. Deposits provide a relatively stable funding source that allows these institutions to hold loans permanently in their portfolios. Washington Mutual, a savings bank, is the only depository on the list of the 10 largest mortgage lenders.
Mortgage banks often offer better terms on fixed-rate mortgages than portfolio lenders, while the reverse is more likely for adjustable rate mortgages. It would be a mistake to place too much reliance on this rule, however, because the variability within each group is very wide.