A company or institution that originates mortgage loans. Mortgage bankers use their own funds, or funds borrowed from a warehouse lender, to fund mortgages.
A mortgage bank is a state-licensed banking entity that makes mortgage loans directly to the consumer. The difference between a mortgage banker and a mortgage broker is that the mortgage banker funds loans with its own capital.
Generally, a mortgage bank originates a loan and places it on a pre-established warehouse line of credit until the loan can be sold to an investor, such as Fannie Mae or Freddie Mac. The process of selling a loan from the mortgage bank to another investor is referred to as selling the loan on the secondary market.
Mortgage banks frequently use the secondary market to sell loans because the funds received pay down their warehouse lines of credit which enables the mortgage bank to continue to lend. A mortgage bank is not regulated as a federal or state bank and does not take deposits from consumers or businesses.
An intermediary who brings mortgage borrowers and mortgage lenders together, but does not use its own funds to originate mortgage loans. A mortgage broker gathers paperwork from a borrower, and passes that paperwork along to a mortgage lender for underwriting and approval. The mortgage funds are then lent in the name of the mortgage lender.
The distinguishing feature 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 facilitate originations for other financial institutions. Mortgage brokers do not close mortgages in their own names.
Because Graystone Mortgage LLC is a mortgage banker, we make all loan determinations “in house.” The loan is originated, processed, underwritten and closed by Graystone Mortgage LLC employees. The loan originator has direct access to the team of processors and underwriters, expediting the loan process for our clients. The client file remains with our team for the duration of the process and is not sent to a third party for consideration. This is an attractive quality to our clients and our referring partners, as it eliminates delays and the need for multiple “hands” in the file.