With so many different lending institutions and mortgage programs available in the financial market these days, it’s hard to keep track of what is what, and which new mortgage programs may actually apply to you. The mortgage lending and brokering industry is complex, while catering to similar objectives, they all share differences within each area of mortgage lending as well as similarities. Many things that lenders and brokers do is collaborate with other lending partners, while some have the ability to act more independently than another. Some methods for securing mortgages require second and third party involvement. When third parties are involved, the amount of time it takes to secure a loan can be a bit more time consuming than by going the route of few parties involvement. Here are a few similarities and differences between some of the main mortgage professionals.
Wholesale lenders are quite similar to mortgage bankers in the capacity of how they collect and implement new loans. They are usually lenders that don’t deal directly with the consumer, but offer mortgage loans through clients such as mortgage brokers or banks. Some banks even have their own wholesale lending divisions. A wholesale lender actually is the entity that underwrites and funds mortgage loans, and whose name appears on the documents. This is different than that of a broker. While a mortgage broker can shop around for the best interest rates and programs for a borrowing client, they can’t approve or fund loans like a wholesale lender does.
Difference Between Wholesale and Correspondent Lending
Along the lines of loan implementation, wholesale lenders and correspondent lenders are similar in that they can create mortgage loans without involving other parties, as well as fund these loans in their own name. However, a correspondent lender can take a mortgage loan after it closes, and sell it to an investor or wholesale lender. Whereas, a mortgage broker would submit a loan package for underwriting, and would typically have an independent wholesale or correspondent lender assist in this process.
Furthermore, wholesale lenders and correspondent lenders are similar in that they can both underwrite their own loans. However, a correspondent lender must do so under the required terms that are put in place by their investors. On the flipside, a mortgage broker has the ability to shop around terms like mentioned earlier, for the best interest rates and programs.
Sometimes people prefer brokers because of the one on one service that often times doesn’t come with the other forms of retail lending. That is not always the case though, since there are many professional individual lenders who are independent, but act on behalf of large lending institutions. This allows for one on one treatment; however their rates are already established by that specific institution.
Wholesale and correspondent lenders have a long lasting reputation and history of experience in the lending industry, and have many relationships with various lending institutions and banks, which creates more options for their potential clients to choose from. If you should have any questions on how to become a wholesale or correspondent lending partner please feel free to contact Dave Kevelighan at 303-520-0004.
