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What is Correspondent Lending?
Can someone with expertise explain what correspondent mortgage lending is? What is mini-correspondent lending? What is the difference between correspondent, mini-correspondent, mortgage banking, and mortgage brokers. I asked multiple so called experts and I keep getting conflicting answers. Thank you very much in advance.
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4 Replies
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It’s basically Brokering 2.0
So – a ‘mortgage broker’ has responsibility for finding the client, taking the app, and supplying documentation to a LENDER. That lender discloses, underwrites (or – another way they say it in this context is makes the credit decision), docs in their name and funds in their name.
That lender then EITHER sells the whole loan and servicing rights to another entity (i.e., investor) or retains the loan in their own portfolio.
The difference between a Broker and a Correspondent is primarily A) the ability to price in YSP (a correspondent can adjust their rates based on how much revenue they want to make v. how much risk they want to take on) B) Ultimate responsibility for the credit decision and C) Potential consequences in a default situation.
I’d be happy to explain further / show you what I mean. Like maybe a Zoom call?
Hit me back any time. afierro@mypowerlender.com or 818 231 0816
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EXCELLENT EXPLANATION, Anthony. Very well said in an understandable format. Appreciate your explanation Professor.
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This is also why I find the term ‘direct lender’ somewhat dubious and laughable.
The term itself feels like a marketing phrase. LITERALLY NO ONE in the FNMAE/FHLMC/FHA/VA/USDA space writes the check themselves. There are Brokers and Bankers. Bankers usually have a ‘prepurchase review’ that they have done with their end investor before funding.No one wants to fund a loan they can’t sell.
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Thank you, Anthony.