Licensed Correspondent Lender

Is there a difference between working with a Correspondent Lender or working with a major Federal deposit bank? The answer may surprise you. 

A Correspondent Lender is also known as a mortgage bank. A Correspondent Lender/mortgage bank specializes in originating and/or servicing (collecting monthly payments) mortgage loans. A Correspondent Lender/mortgage bank is a state-licensed entity that makes mortgage loans to consumers. Generally, a Correspondent Lender/mortgage bank utilizes funds from the secondary mortgage market such as Fannie Mae, Freddie Mac or other large mortgage servicing companies. A Correspondent Lender/mortgage bank can vary in size. Some Correspondent Lender/mortgage banking companies are nationwide some are local. Excel Mortgage Network, is a local Correspondent Lender.

Many Correspondent Lenders/ mortgage bankers are opting not to service the loans they originate. By selling them shortly after they are closed and funded, they are eligible for earning a service released premium. The secondary market investor that buys the loan will earn revenue for the servicing of the loan for each month the loan is kept by the borrower.

Unlike a federally chartered savings bank, a Correspondent Lender/mortgage bank generally specializes only in making mortgage loans. They do not take deposits from customers. Their funds come primarily from the secondary wholesale market. Examples of the secondary market lenders most known are Fannie Mae, and Freddie Mac.

Correspondent Lenders/ mortgage bankers can be very competitive in mortgage lending as they specialize in only lending, and do not have to factor in subsidizing any losses in other departments such as traditional banking. This translates to more competitive rates to the consumer. Additionally, since a Correspondent Lender/mortgage bank sells loans to more than one secondary market servicer, they offer a larger range of loan product and flexibilty that a traditional deposit federal banks.    

In 2008, over 70% of all home loans originated across the country were originated by Correspondent Lender/mortgage banks.