Mortgage Banker vs Mortgage Broker

What is the key difference that separates a mortgage broker from a mortgage banker?

Both mortgage brokers and mortgage bankers have access to funds available to the public via credit unions, banks, agencies, and CMBS lenders, although mortgage bankers have access to a broader market of lenders, such as life insurance companies. Mortgage bankers are correspondents for these life insurance companies, meaning they exclusively represent a life company in a certain market. Life insurance companies can often provide longer loan terms and more flexible prepayment structures, on a non-recourse basis, at highly competitive rates. A banker’s access to lenders that brokers cannot access in today’s climate where life companies are the most competitive is a valuable tool.

Due to this “correspondent” system and the long-tenured relationships established therein, mortgage bankers have deep knowledge of the lending parameters for each of their lenders. Additionally, mortgage bankers service the loans for their correspondent lenders, providing a direct channel of contact should any issues arise during the loan term.

Mortgage banking can provide personalized servicing. Why is it important for us to do the servicing?

Unlike in brokerage, mortgage bankers tend to servicing issues that arise during the loan. In addition, mortgage bankers have the exclusive privilege to perform and assist with the following:

• Lease approvals
• Transfers of guarantors
• Assumptions
• Additional funding/supplemental requests
• Modifications
• Substitutions of collateral