Definition of "Mortgage banker"

Joy Jones real estate agent

Written by

Joy Joneselite badge icon

Bluecoast Realty Jacksonville

Mortgage banker is the person or business that originates mortgages and receives payments.

The mortgage banker typically sells these mortgages to investors and obtains service fees for the loans. The mortgage banker is a major initiator of Federal Housing Administration (FHA) and Veteran Administration-insured mortgages and also serves a key function in the conventional mortgage markets.

Financial help is often sought from a lender, typically a commercial bank. The bank becomes a warehouse for mortgage money, and the mortgage banker draws on these funds until payment is received from the investors. Usually, the mortgage banker continues to service the loan even after the loan has been packaged and sold. For this management service, a small percentage of the amount collected is retained before forwarding the balance to the investor.

The success of the mortgage banker depends upon the ability to generate new loans. In some geographic areas, mortgage bankers are the primary source for financing real estate. All mortgage bankers try to stay in constant touch with investors and are aware of changing market conditions and lender requirements. Quite often the loan origination fee or finder's fee charged the borrower is more than offset by a lower interest rate from a lender not directly accessible to the borrower.

Mortgage bankers are involved in both commercial and residential financing and also carry out related activities such as writing hazard insurance policies, appraisals, and investment counseling. As with mortgage brokers, mortgage bankers are regulated by state law.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

See concrete block. ...

Valuation method for land or improvements to property. It takes into account gross rentals less operating expenses. ...

The term compounding refers to the process of gaining interest on interest. While usually, interest is credited to the existing principal amount, compounding makes it possible to credit ...

A society of real estate professionals providing a counseling service on real estate purchase and investment decisions through a negotiated fee rather than charging a commission. ...

Sewer system built into the streets of a neighborhood that is capable of accommodating the excess water flow of a heavy storm without backing up or flooding. ...

Interest computations based only on the original principal. For example, the simple interest on a $100,000, 8% loan is $8,000. It is compared with compound interest which is applied to the ...

Distance from the location of natural ground and water to the actual ground level. ...

A real estate owner's policy and rules regarding the use of the property by the tenant. In insurance, a contract that provides coverage against given risks. Coverage limits for real ...

(1) The interest rate used to convert future receipts or payments in connection with real estate property to their present value. The cost of capital is used as the discount rate under the ...

Popular Real Estate Questions