Mortgage Bankers Financing
Sources...
A mortgage banker
makes a real estate mortgage
loan and then sells
it to a long-term
investor.
The
process begins with
locating borrowers,
next qualifying
them, then preparing
the necessary loan
papers, and finally
making the loans.
Once the loan is
made, it is sold for
cash to a life
insurance company,
pension or trust
fund, savings
institution, or
government agency.
The mortgage banker
is usually retained
by the mortgage
purchaser to service
the loan, that is,
to collect the
monthly payments and
to handle such
matters as insurance
and property tax
impounds,
delinquencies, early
payoffs, and
mortgage
releases.
Mortgage bankers
often take the form
of mortgage
companies, that vary
in size from one or
two persons up to
several dozen. As a
rule, they are
locally oriented,
finding and making
loans within 25 or
50 miles of their
offices. This gives
them a feel for
their market,
greatly aids in
identifying sound
loans, and makes
loan servicing much
easier. For their
efforts, mortgage
bankers typically
receive 1% to 2% of
the amount of the
loan when it is
originated, and from
¼ to ½ of 1% of
the outstanding
balance each year
thereafter for
servicing. On very
large loans, such as
a major shopping
center or a large
office building, the
servicing fee drops
to 1/10 of 1%.
Mortgage banking
is not limited to
mortgage companies.
Commercial banks,
savings and loan
associations, and
mutual savings banks
in active real
estate areas often
originate more real
estate loans than
they can hold
themselves, and
these are sold to
other investors.
Mortgage bankers are
important sources of
FHA and VA
loans.
Mortgage brokers,
in contrast to
mortgage bankers,
specialize in
bringing together
borrowers and
lenders, just as
real estate brokers
bring together
buyers and sellers.
The mortgage broker
does not lend his
own money, nor does
he usually service
the loans he has
arranged. The
mortgage broker's
fee is expressed in
points and is
usually paid by the
borrower.
Mortgage
Bankers To Municipal
Bond
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