Unlike a federally chartered savings bank, a mortgage bank generally specializes only in making mortgage loans. The secondary market investor that buys the loan will earn revenue for the servicing of the loan for each month the loan is kept by the borrower. By selling them shortly after they are closed and funded, they are eligible to earn a " service released premium". Many mortgage bankers are opting not to service the loans they originate. Their two primary sources of revenue are loan origination fees and loan servicing fees (provided they are a loan servicer). Many mortgage banks employ specialty servicers for tasks such as repurchase and fraud discovery work. Some may originate a large loan volume, exceeding that of a nationwide commercial bank. Some mortgage banking companies are nationwide. The primary source of funds, however, comes from the warehouse lender.Ī mortgage bank can vary in size. To support their operations, a mortgage bank acquires a certain amount of equity, which is then used to secure the warehouse line. A mortgage bank is not regulated as a federal or state bank and does not take deposits from consumers or businesses. Mortgage banks sell the loans because the funds received pay down their warehouse lines of credit which enables the mortgage bank to sustain their lending activities. This is in contrast to the primary market, which for mortgages typically refers to the bank buying the mortgage deed of trust from the homeowner for the face amount of the loan, adjusted for discount points and other price adjustments. The process of selling a loan from the mortgage bank to another investor is referred to as selling the loan on the secondary market. The credit risk is typically absorbed by the Agencies, which include Fannie Mae, Freddie Mac, and Ginnie Mae. 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, which are typically large institutions. The difference between a mortgage banker and a mortgage broker is that the mortgage banker funds loans with its own capital. In the United States, a mortgage bank is a state-licensed banking entity that makes mortgage loans directly to consumers. ( Learn how and when to remove this template message)Ī mortgage bank is a bank that specializes in originating and/or servicing mortgage loans. ( October 2010) ( Learn how and when to remove this template message) You may improve this article, discuss the issue on the talk page, or create a new article, as appropriate. The examples and perspective in this article may not represent a worldwide view of the subject.
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