Why Mortgage Banking Is Better Than Mortgage Brokering?
In case of brokering, there is no guarantee that the financial institutions will be providing the client with a mortgage facility. The mortgage banks have the ability to earn handsome fees for selling a closed loan to a secondary buyer. A brokerage firm is not responsible for handling financial issues of a transaction.
The concept of mortgage banking is different from brokering. In case of mortgage banking, the firms offer loan to a customer; however, in case of brokering, the broker simply acts as an agent or a liaison between customer and an array of financial institutions.
In order to offer loan to the clients, most of the mortgage banking firms use a warehouse line of credit, which in simple terms is equivalent to the worth of a credit card with a very high credit limit. In some cases, the credit limit may go up to millions, as far as offering loans to the clients is concerned. At times, mortgage banking firms offer loans for a good amount of time to create a recurring revenue stream. Considering the present lending market scenario, most of the mortgage banking firms are immediately selling the loans after they have closed. Generally a lag time of 48 hrs to 72 hrs is maintained between a closing and a sale. Nevertheless, the secondary buyers have become more careful as it is a question of acquiring closed loans. In the housing market, the major financial fallout that took place was due to the fact that mortgage firms and buyers were not diligent. As a matter of fact, many big financial firms had to incur heavy loss in the range of tens of billions of dollars, when poor credit and low income borrowers were unable to repay the loan amount. Since then, the government as well as many regulatory agencies has vetoed these kinds of loans to be made from mortgage banking firms.
Becoming a mortgage banker is always beneficial as compared to becoming a mortgage broker. If you opt to become a mortgage banker, you can expect high amount of fees, and more status with respect to working with esteemed clients. Moreover, your capability to expand as a mortgage banking firm is much more than limiting yourself to mortgage brokering. However, if you consider the other side of the coin, a mortgage banker has to bear more amount of risk, when providing loan through their own company.
The concept of mortgage banking is different from brokering. In case of mortgage banking, the firms offer loan to a customer; however, in case of brokering, the broker simply acts as an agent or a liaison between customer and an array of financial institutions.
In order to offer loan to the clients, most of the mortgage banking firms use a warehouse line of credit, which in simple terms is equivalent to the worth of a credit card with a very high credit limit. In some cases, the credit limit may go up to millions, as far as offering loans to the clients is concerned. At times, mortgage banking firms offer loans for a good amount of time to create a recurring revenue stream. Considering the present lending market scenario, most of the mortgage banking firms are immediately selling the loans after they have closed. Generally a lag time of 48 hrs to 72 hrs is maintained between a closing and a sale. Nevertheless, the secondary buyers have become more careful as it is a question of acquiring closed loans. In the housing market, the major financial fallout that took place was due to the fact that mortgage firms and buyers were not diligent. As a matter of fact, many big financial firms had to incur heavy loss in the range of tens of billions of dollars, when poor credit and low income borrowers were unable to repay the loan amount. Since then, the government as well as many regulatory agencies has vetoed these kinds of loans to be made from mortgage banking firms.
Becoming a mortgage banker is always beneficial as compared to becoming a mortgage broker. If you opt to become a mortgage banker, you can expect high amount of fees, and more status with respect to working with esteemed clients. Moreover, your capability to expand as a mortgage banking firm is much more than limiting yourself to mortgage brokering. However, if you consider the other side of the coin, a mortgage banker has to bear more amount of risk, when providing loan through their own company.
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