Now is the time to work with a Correspondent Lender

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A correspondent lender is a blend between a bank and a mortgage broker.   What sets correspondent lenders apart from others is that they have significant credit lines that allow us to fund loans which are then sold to the lender after closing.   A correspondent lender processes, underwrites and prepares the loan documents which allows them more flexibility than the traditional broker.  Correspondent Lenders have access to many different lenders unlike most banks.   Even if bank mortgage companies can broker, loan originators often will not as they’re typically paid a lower commission if they do not use their bank’s products.

So why is now such an important time to select a correspondent lenders?   With banks pulling back (or suspending) products or repricing and lenders shutting down, it’s important to work with a Mortgage Professional who can make adjustments if needed in a rapidly changing market.   Many were caught at closing when they sent loans to American Home Mortgage, one of the nations largest lenders.   If you were getting ready to close with a mortgage broker, the loan would need to be re-processed, re-underwritten, and new loan docs prepared and delivered to escrow.  With a correspondent lender, as long as the rate had not changed, you could possibly keep the same docs and your escrow appointment.

Because it is more difficult to become a Correspondent Lender vs. a Mortgage Broker there are fewer of us and therefore, we’re a bit more challenging to find.  How do you  know if your Mortgage Professional is employed with a Correspondent Lender?   Ask.  A “mortgage broker” or “mortgage banker” is not the same as a correspondent lender. 

A Correspondent Lender just may make the difference in your transactions closing on time in this uncertain market.

Comments

  1. Rhonda,

    I love your blog, but can’t agree with you on this one. There are Correspondent Lenders all over the nation closing down because they put loans on their credit lines that they can’t get funded. There is a BIG one here in Arizona that is stuck with 30 million on his line!

    A correspondent lender is subject to the same risks that closed down American Home and caused National City to stop offering second mortgage loans. If you can’t get the loans off of your credit line then you are screwed when the bankers come calling with a margin call.

    Keep it the good work and keep it real!

  2. David, I’m glad you said that. You’re right. There are correspondents that will wind up in big trouble too. A correspondent can broker when needed, too. A broker can only broker. And a bank just has the bank.

    If you had to select a source for your mortgage where would you go?

    What do you recommend?

  3. Rhonda,

    I think that the advice coming from the originator regardless of whether they be broker, correspondent, mortgage banker, or bank, is the most important of all.

    Almost everyone is acting like a broker these days and passing the loans through as quick as possible.

    I think you have a LOT more value to your clients and the world at large then the fact that you work for a correspondent lender. If I were you, I would pray that your owners manage their warehouse lines with great care and wisdom.

    Keep up the good work and remember that in all practicality, you are likely working for a correspondent lender who is acting like a broker during these difficult times of liquidity. Therefore, being a broker in these times is actually a good thing….as long as you know how to get the business in the first place.

  4. Thanks, David. These are times we will not forget anytime soon.

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