Mortgage Banker
A mortgage banker is a company or individual that originates, funds, and often services mortgage loans using their own capital or credit lines from investors. Unlike mortgage brokers, mortgage bankers make lending decisions and close loans in their own name, then typically sell the loans to secondary market investors while often retaining servicing rights.
Example
“The mortgage banker approved our loan application and will service the payments throughout the life of the loan.”
Memory Tip
Mortgage bankers use their own BANK's money - they're the direct source of funds.
Why It Matters
Working with a mortgage banker can provide more control over the lending process and potentially faster closing times since they make their own underwriting decisions. They may also offer competitive rates due to their direct relationships with investors who purchase their loans.
Common Misconception
People often confuse mortgage bankers with mortgage brokers, but bankers use their own funds while brokers arrange loans with other lenders.
In Practice
ABC Mortgage Bank approves and funds a home loan using their own capital, closes the loan in their name, then sells it to Fannie Mae the following week while continuing to collect monthly payments and handle customer service for the borrower.
Etymology
Combines 'mortgage' (dead pledge) with 'banker' from Italian 'banchiere,' referring to money changers who used benches (banco) for business.
Common Misspellings
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