What is the Difference Between a Broker, a Bank, and a Mortgage Banker?
As you may know, I was a mortgage broker for many years until I became a Mortgage Banker (correspondent lender) in 2009. I made the change because it was better for my clients — it made it possible for me to get their loans approved & closed faster, with better pricing & rate options.
Here are the main differences, as I understand them:
A Broker is an independent mortgage consultant who selects a lender/loan program for a client, and then submits the loan to the lender’s wholesale department. I used to be a broker, and loved it, but since the financial crisis in 2008, many wholesale lenders have left the business, and the ones that are left no longer provide brokers with the kind of service I used to get. I stopped being a broker because I could no longer guarantee my clients that their loans would close on time.
A Bank is a financial Institution (like Wells Fargo or Bank of America) that offers mortgages in addition to other services — from checking & savings accounts to managing investment portfolios. Banks offer stability, but, for my taste at least, they tend to be large and impersonal. While there are some very good loan officers working for big banks, the rule seems to be that the banks attract less experienced, less motivated loan officers, as bank loan officers are not required to personally be licensed. Many of my Realtor partners have told me that they are very slow (compared to me) in getting loans approved and closed.
I decided to become a Mortgage Banker (correspondent lender) because, for me, it combined the best of both worlds. Unlike a big bank, we specialize in mortgage loans – that’s all we do. We have the wholesale relationship to lending sources, which makes the rates very competitive. We’re also able to be closer to ourcustomers, and we tend to form long-lasting friendships with them, and take a more personal interest in their success with their home purchase/financing. We have the freedom and independence of a broker, because we have correspondent relationships with 6 different lending institutions – so we’re able to provide our clients with the best available loan programs and pricing — by shopping not only programs, but the major lending sources. And we do thisfor you as part of our service.