Types of lenders

July 12, 8:50 PMReal Estate Marketing ExaminerSpencer Rascoff

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If you're buying a home and need to choose a lender, who do you use? A mortgage broker or a bank? And, who are correspondent lenders and loan officers and how they relate to a buyer's needs?

Here's a quick summary from the article  "What are the differences between a loan officer, mortgage broker, lender, correspondent lender, mortgage banker, and portfolio lender?"

Mortgage Brokers

Mortgage brokers match you with a lender.  They teach you about different types of loans, gather data about your qualifications and shop for lenders, matching you with one.

Loan Officers

Loan officers are typically employed by lenders or mortgage brokers.  They find new clients, counsel borrowers on how to choose the best mortgage, and fill out loan applications. 

Lenders

Lenders are the ones who front the money to fund your loan.  Lenders have various names based on how they acquire their clients and what they do with your loan after it is funded.

Retail vs. Wholesale Lenders

-- Retail lenders reach out directly to consumers. (i.e., your local bank).

-- Wholesale lenders fund mortgages acquired through brokers outside of their company.  The brokers process loans and then sell them to wholesale lenders to fund.

-- Many banks have both retail and wholesale channels.

Mortgage Bankers vs. Portfolio Lenders

-- Mortgage bankers fund loans but typically turn around and sell them in the secondary market to secondary lenders such as Fannie Mae and Freddie Mac.  

-- Portfolio lenders include many community banks, credit unions, and savings & loans companies.  Portfolio lenders use money from their customers’ bank deposits to fund loans so they can hold onto the loans and keep them in their portfolios.

Correspondent lenders

Correspondent lenders are a mix between brokers and lenders.  They technically fund loans with their own borrowed money but typically lock in rates with wholesale lenders at the same time.  This mitigates their risk since they can quickly turn around and sell the loan. 

If you need a loan, you can search across thousands of loan officers, mortgage brokers, mortgage banks, savings and loan companies, and credit unions, through Zillow Mortgage Marketplace. You can compare quotes and fees side-by-side, across a broad range of lenders, so you find the best value.