What is the primary distinction between a mortgage banker and a mortgage broker?

The primary distinction between a mortgage banker and a mortgage broker lies in whether the entity makes loans directly or acts solely as an intermediary in the loan process. A mortgage banker is an entity that has its own funds and originates loans, which it then often sells to investors or holds for its own portfolio. They are involved in the entire loan process, including underwriting, funding, and servicing the loan.

On the other hand, a mortgage broker does not lend money directly. Instead, brokers work as intermediaries between borrowers and lenders, helping borrowers find suitable mortgage products from various lenders. They facilitate the connection but do not handle the funds used for lending themselves. This key function of loan origination sets apart mortgage bankers from mortgage brokers.

Understanding this distinction is essential for recognizing the roles these entities play in the mortgage industry and how they contribute to the overall lending process.