Mortgage Originators

Mortgage Loan Originators Website

A mortgage originator is a company or individual that works with a borrower to complete a mortgage transaction. A mortgage originator can be either a mortgage broker or a mortgage banker. Mortgage originators are part of the primary mortgage market, which also consists of credit unions and banks. Mortgage originators consist of large firms and smaller companies and individuals who originate mortgages slightly differently. Although multiple large firms dominate the market for mortgage originations, there are thousands of smaller firms and individuals which also account for a significant percentage of total mortgage originations.

 

A mortgage broker is either an individual or company which brings borrowers and lenders together for the purpose of loan origination, but does not originate or service the actual mortgages. The broker might also negotiate with the lender to try and find the best possible financing deal possible for the borrower. A mortgage broker is simply the intermediate agent between a lender and borrower.

 

A mortgage banker is either company or individual that originates mortgages using their own funds, or funds borrowed from another lender, to fund mortgages. After a mortgage is originated, a mortgage banker might retain the mortgage in portfolio, or sell the mortgage to an investor. Additionally, after a mortgage is originated, a mortgage banker might service the mortgage, or they might sell the servicing rights to another financial institution. A mortgage banker's primary business is to earn the fees associated with loan origination. Many mortgage bankers do not retain the mortgage in portfolio. Basically, a mortgage banker usually sells mortgages into the secondary mortgage market, which consists of securities or bonds collateralized by the value of mortgage loans. The secondary mortgage market includes packages of mortgages that comprise a mortgage-backed security (MBS), asset-backed security (ABS) or collateralized debt obligation (CDO).

 

The distinguishing characteristic between a mortgage banker and a mortgage broker is that mortgage bankers close mortgages in their own names, using their own funds, while mortgage brokers make originations for other financial institutions and mortgage brokers do not close mortgages in their own names.

 

In legal terms, a mortgage loan origination means providing services to a customer by soliciting, negotiating, explaining, or finalizing the terms of a mortgage loan. However, a person is not considered to be soliciting' a mortgage loan if he or she solely takes customer information and refers the customer or customer's information to an authorized mortgage loan originator, or only provides clerical or secretarial services to an authorized mortgage loan originator, mortgage banker or mortgage broker.