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.