Mortgage Updates

Over the years I have been asked “What is the difference between Mortgage Brokers and Mortgage Bankers.” Is one better than the other? 

I have always worked for Mortgage Banking firms. – Therefore, I may be a bit biased. My company now is also a Mortgage Banking company.

So, let’s define a mortgage broker. A broker takes the application from the customer, packages the loan and then shops wholesale companies for the best fit and pricing. Often, the broker will already have a preferred “lender” that closes most loans. Beyond application and processing everything else is completed by the wholesale lender. – Underwriting, drawing loan docs and funding the loan are all done by the wholesale company.

A Mortgage Banker, on the other hand, has more control over the entire process. The transaction starts the same way by the Loan Consultant working with the applicant on originating the loan. The transaction is then processed. But, here the similarities change. A mortgage banker then completes the transaction by underwriting the loan, drawing loan documents and finally funding the loan prior to release for recordation.

Some Loan Originators working in the “home office” are under the same “roof” as the finalization or fulfillment team. (underwriters, doc drawers, funders) However, most mortgage bankers are structured with a “centralized” fulfillment center serving several origination/processing centers. This is the most effective and cost efficient way to provide expedited service to the sales team and of course the consumer/customer.

Some mortgage banking companies allow their originators to ALSO Broker loan files to approved wholesale companies. This is an acceptable practice and provides the customer with the most options and the best possible solutions. The reason that mortgage bankers allow their originators to “also” broker loan transactions is to add niche loan products. It may be that the mortgage banker does not want to support this product “in house” or there is not enough business in a small niche to warrant the training of underwriters, and support staff as well as the bundling for ultimate sale through the secondary markets.

In my experience, working with an “in house” team is preferable to outsourcing business. I have better control over timing and a higher sense of confidence in the successful completion of my transaction in the time frame required by buyers, sellers and real estate professionals.

Do we broker loans? - Yes. If we don’t have the product necessary in house, we most certainly have the resources to broker the loan to our approved and proven business partners.

Please contact me with any questions you may have. Ingrid