What is a loan correspondent
A mortgage is a loan that is secured against real property which you then pay back over time based on a payment schedule. If you default on the payments then the lien holder (bank) can recover the property they have the lien on and sell it asd a way to recover their funds. Also, technically many states do not use mortgages any longer, they use Trust Deeds. Mortgage has become synonimus with home loan but there are actual legal differences.
Coorespondent lending. When a mortgage company is acting as the actual investor (bank) and will fund the loan in house on one of their warehouse lines. For instance:
You decide to do a loan with lender A. Lender A has a 30 year fixed which you can not live with out. This lender will accept your loan package, underwrite the loan and fund the loan all in house. What you do not see is that this product is really BANK 123's product and that they are the actual investor. Once lender A funds the loan it will be sold to BANK 123 as soon as your
file clears quality control.
How does this help you or the client?
I work at a Brokers office. I can go to any lender out there and receive their rates wholesale; but I am just one Loan Officer at one office. The rates OK but not great. Lets say I'm looking at BANK 123's 30 year fixed @ 6% with a .5 cost.
Now I go look at Lender A's rates. They have a 30 year fixed at 6% at no cost. Now I may not know that Lender A is a coorepondent lender of BANK 123 and this is the EXACT same loan; all I know is the rate is better. Why is this? Well Lender A is acting as a bank in that they are funding the loan in house and then selling the product to BANK 123. Lender A received better pricing based on volume and passed this on to me at the Broker level to secure the loan.
There is obviously MUCH more to this but this is the cliffs notes version. Hope it helps.
Kevin 866-562-6838 x 106