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The Lender: Bank or Mortgage Broker?

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Mortgages are marketed (that is to say, offered to you) by several types of lenders. You can get a loan from mortgage brokers, mortgage bankers, banks, credit unions, and savings & loans. In most cases, the lender earns origination fees and, in the case of a mortgage broker, a broker's fee. The servicer is the company where you, the borrower, make your payment.

What Is a Mortgage Broker?

Mortgage brokers are much like independent insurance agents or, for that matter, your local supermarket. They have access to many lenders (roughly equivalent to suppliers, such as tomato companies) and many different programs (several brands of frozen, canned, or fresh tomatoes). In some cases, especially where your credit is not flawless, and nonconforming properties are involved, a mortgage broker can find funding for you. (They might also be able to find tomatoes for you, but that's extra.) They charge a fee, and are sometimes compensated by the lenders. They provide a great service for many consumers, and originate more than 50% of loans in the country.

Mortgage brokers normally originate the loan, process it, and pass it along to a lender, who sells it to an investor. These investors range from state pension funds to government and quasi-government companies such as the Federal National Mortgage Association (FNMA), or "