Definition of Mortgage Broker:
Orange County Mortgage Broker:
A mortgage broker is an intermediary who brings mortgage borrowers and mortgage lenders together, but they do not use their own money to originate their mortgages, a company that does that is called a mortgage bankers. A mortgage broker gathers documents (paystubs,W-2’s, homeowners insurance, etc) from a borrower, and passes that paperwork along to a mortgage lender for underwriting and approval. The mortgage funds are then lent in the name of the mortgage lender. A mortgage broker collects an origination fee and/or a yield spread premium (YSP) from the lender as compensation for its services.
A mortgage broker is should never be confused with a mortgage banker, which closes and funds a mortgage with its own funds, typically off of a warehouse line of credit. Mortgage brokers frequently facilitate transactions for wholesale mortgage bankers who then quickly sell their closed loans to a take-out or end investor such as Wells Fargo or Bank of America.