Mortgage Bank

A Mortgage bank specializes in originating and or servicing mortgage loans. A mortgage bank is a state-licensed banking entity that makes mortgage loans directly to consumers. The difference between a mortgage banker and a mortgage broker is that the mortgage banker funds loans with its own capital. 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 such as Fannie Mae, or Freddie Mac. The process of selling a loan from the mortgage bank to another investor is referred to as selling the loan on the secondary market. Mortgage banks frequently use the secondary market to sell loans because the funds received pay down their warehouse lines of credit which enables the mortgage bank to continue to lend. A mortgage bank is not regulated as a federal or state bank and does not take deposits from consumers or businesses. A mortgage bank raises some equity which it uses to guarantee the warehouse line and the bulk of the funds are provided by the warehouse lender.... Mehr