What is the key difference that separates a mortgage broker from a mortgage banker?
The process by which capital is provided by a mortgage banker is in many ways similar to that of a mortgage broker. However, the primary difference between the two is the mortgage banker's access to exclusive programs and funds through a correspondent network of lenders.
While a mortgage broker has access to funds available to the public via credit unions, banks and CMBS lenders; mortgage bankers have access to the same, as well as to a broader market of lenders, such as life insurance companies. Life insurance companies can often times provide longer loan terms and more flexible prepayment structures, on a non-recourse basis, at highly competitive rates. Life insurance funding is typically only available through mortgage banking correspondents.
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.
Both a broker and banker will strive to find the best interest rate, but a banker also understands the quirks and tweaks of what can and cannot be approved with the lenders they do business with.
Mortgage banking can provide personalized servicing. Why is it important for us to do the servicing?
Unlike in brokerage, mortgage bankers typically have the ability to tend to any servicing issues that arise during the course of the loan. In addition, mortgage bankers have the exclusive privilege to perform and assist with the following:
- lease approvals
- transfers of guarantors
- additional top offs