| Mortgage lenders are generally classified
into three types:
• Mortgage Banks
• Savings and Loans Associations
• Mortgage Brokers
Other types of lenders including Portfolio Lenders, Direct
Lenders and Correspondents can also be seen in the field of
Mortgage Lending.
Let’s talk more about the different types of mortgage
lenders.
Mortgage Banks
Mortgage Banker
is generally defined as a lender that is large enough to originate
loans and create pools of loans which can later be sold directly
to Fannie Mae, Freddie Mac, Ginnie Mae, jumbo loan investors,
and others. Different banks have different types of loan packages.
Some will service the loans originated by them, whereas others
will not. The number of Fixed Rate Mortgages (FRMs) and Adjustable
Rate Mortgages (ARMs) also differ from bank to bank. It is
advisable that you check rates of different mortgage banks
so that you can determine the package that best suits your
requirements. A mortgage broker can go over the list of lenders
and choose the lender that is most likely to accept your loan
application. A mortgage broker can also help you compare different
rates and schemes and help you shortlist lenders.
Savings and Loans Associations
Savings and loans associations generally concentrate on one-
to four-family residential mortgages, multifamily mortgages
and commercial mortgages. Savings and Loans Associations are
gaining rapid popularity and are becoming more like regular
banks. As a borrower, you must compare rates of different
associations before you select one for financing your loan.
Mortgage Brokers
Mortgage Brokers
act as matchmakers between the borrower and the lender. They
are the companies that originate loans with the intention
of brokering them to wholesale lending institutions.
Mortgage brokers choose the loan scheme best-suited for the
borrower’s personal needs from a variety of lending
schemes. This helps the borrower save time and resources which
are otherwise utilized in looking around and short listing
the best lending institution. Currently, more than half of
all mortgage loans in the United States are originated by
Mortgage Brokers. Most mortgage brokers are especially adept
at sub-prime loans, FHA loans and VA loans.
Portfolio Lenders
Portfolio lenders are those institutions that originate loans
out of their own funds for their own selves. This means that
these institutions are lending for their own portfolio of
loans and do not worry about selling their portfolio immediately
on the secondary market. Portfolio lenders are generally large
banks and large savings and loans associations.
Direct Lenders
Direct lenders also fund their own loans. However, direct
lenders can be a very small institution to a large bank.
Correspondents
Correspondent can be an individual or a company originating
and closing home loans in their own name, and later selling
these loans individually instead of pools to a larger lender
often known as a sponsor. This sponsor re-sells the loan in
the form of a pool to other corporations as a mortgage banker.
Related Mortgage Career Topics:
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