Mortgage Banks Focus on Creating or Servicing Real Estate Mortgages
A mortgage bank must be licensed by the state that makes
real estate loans direct to homeowners. In general a mortgage
bank obtains monies from secondary mortgage market lenders like
Freddie Mac, and other big secondary mortgage servicing organizations. They must obtain secondary market monies as mortgage banks are not a depository
entity, another way of saying they do get their income from deposits, the same way savings banks do.
Mortgage banks may vary in their size. Several mortgage banking organizations are nationwide. Others may create a large volume of loans in excess of what of a national commercial bank would generate. A large number mortgage banks utilize specialty servicers like Real Time Resolutions, used for functions like repurchase and
Their two main sources of revenue stem from
loan creation fees, and fees for loan servicing (provided they service loans). A large number of Mortgage bankers do not to service any loans they create. By selling them to the secondary market a short time after they have closed and are funded, they become eligible to earn a service release premium. When secondary market purchaser buys the loan they will earn income for servicing the loan for every month the mortgage is retained by the borrower.
Different from a savings bank with a federal charter, a mortgage bank most often only specializes in originating mortgage loans. These banks do not accept customer deposits. Their income source is chiefly related to the wholesale side of secondary market. The two largest secondary market lenders are Fannie, and Freddie.
Mortgage banks most often operate under the diverse banking regulations applicable in each state they operate.
For a list of mortgage banks by state, see the state bank or financial department in your state. individually. While a federal bank might conduct business under federal laws, consumers may have additional safeguards under their applicable state banking laws in the way of consumer protection.
A mortgage bank normally is very competitive when it comes to mortgage loans as this is their
specialty and the only type of lending they do, and have no reason to figure subsidized losses from other departments the same as traditional banks. Although often they do not have access to similar lower cost
adjustable rate loans typically featured by federal banks or have access to federal funds.
Mortgage banks market share of single family real estate loans rose from 20% from 1980 to more than 41% by 1991 throughout the Savings and Loans disaster.
Feb 11, 2011
Categories: Mortgage |
Real Estate Finance