Mortgage Broker vs. Correspondent Lender

When you're looking to get a mortgage loan, you may work with a correspondent lender or you may choose to work with a mortgage broker.  People often confuse the two job types even though both will glean the same results: a new home. However, it is important to understand the difference between the two types of jobs so you know what to expect from them during the mortgage application process.

A mortgage broker is an individual or firm that acts as an independent agent for both the borrower and the lender of a mortgage loan.

Mortgage brokers are the middle man between you and the lending institution, which can be a bank, trust company, credit union, mortgage corporation, finance company or even an individual private investor. A mortgage broker will analyze your financial situation to determine which lender is the best fit for your loan needs but typically works with one or 2 institutions. He or she will submit your mortgage application to one or more lenders in order to sell it, and works with the chosen lender until the loan closes. The chosen lender processes, underwrites and funds the loan.  He or she may receive a commission from the borrower if the loan closes.

A correspondent lender is a representative of a mortgage broker, who has relationships with multiple institutions, and can farm out that loan scenario to all of their institutions.  This allows the best loan program and pricing for the client.  The correspondent is able to utilize this relationship to allow them to process, underwrite and fund the loan on behalf of the banking institution keeping control of the file from cradle to grave.  Correspondent lenders can be paid a commission or salary for their services.