What is a Mortgage Banker?

Introduction

A mortgage banker is a financier- an individual or company- that issues mortgage loans directly to a borrower. Some mortgage bankers continue to directly deal with the borrower during the loan tenure while the majority of mortgage bankers sell the mortgages to a secondary mortgage company. Mortgage bankers are also known as direct lenders or non-institutional lenders.

Mortgage Banker and Mortgage Broker

A mortgage banker and mortgage broker have different functions, although some people take both for the same. The mortgage broker is an intermediary between the prospective borrower and the lender. The lender is the party who actually has the money to finance the loan. The mortgage broker does not issue the loan, but only brings the borrower and the mortgage banker together.

Functions

Mortgage bankers are not banks, so they are not bound by state and federal laws governing the banking industry. Mortgage banking usually comes under the purview of the department of banking or real estate. Each state has its own regulations concerning the mortgage banking sector. Mortgage bankers generally have to acquire a license from the government of the state where it operates.

Mortgage bankers’ functions include sourcing the money, approving individual loans and managing and closing the transactions. Dealing directly with the mortgage banker is generally beneficial as this helps you to avoid broker’s fee. Direct dealing also helps to speed up the process. However this has the drawback that the borrower does not get to compare options. The best way would be to get quotes from several mortgage bankers at the same time and shortlist what suits you.

Choose Well

Make sure that the mortgage banker you choose has a proper license to operate in your state. Also check the banker’s credentials and past history with the state banking department. You can also refer to the Better Business Bureau to see if the banker has a history of consumer complaints.