Types of Mortgage Lenders

There are a number of types of primary mortgage lenders that you may encounter when shopping for your mortgage loan. To give you a better understanding of these service providers, a brief explanation is provided below.

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Typically originate loans and then sell these loans to the secondary mortgage market shortly after funding. (The mortgage banker may or may not sell the servicing of the loan.) Often mortgage bankers have attractive loan programs and rates.

  • MORTGAGE BANKERS

  • PORTFOLIO LENDERS

  • DIRECT LENDERS

  • CORRESPONDENTS

  • MORTGAGE BROKERS

  • WHOLESALE LENDERS

Typically originate loans and then sell these loans to the secondary mortgage market shortly after funding. (The mortgage banker may or may not sell the servicing of the loan.) Often mortgage bankers have attractive loan programs and rates.

Banks, Credit Unions & Savings & Loan

  • Use funds gathered from their customers through checking, savings and certificates of deposit to make mortgage loans. The institution may hold the loan in its portfolio or sell it to a secondary mortgage market.

Secondary Mortgage Market

  • When you apply for a home mortgage, you may be under the impression that the mortgage lender will be servicing the loan until it is paid off. This may not be the case. It is common practice for the mortgage loan to be bought and sold to a secondary mortgage market investor, sometimes more than once in the life of a loan.
  • These transactions will not affect your mortgage amount or your mortgage payment. The secondary mortgage market is comprised of investors like Fannie Mae and Freddie Mac. Selling loans to the secondary mortgage market provides primary lenders with funds needed to issue new mortgage loans.

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