The Difference Between a Broker, a Lender and a Portfolio Lender
May 16th, 2007 Categories: Financing, Keller Williams
Here’s what I have recently learned is the difference between a broker, a lender, and a portfolio lender.
Seems to me these differences are important things to undertand in our line of business
1. Broker. Broker’s don’t have their own money to lend. Brokers have access to various lender’s money. i.e. Wells Fargo, Countrywide, Citibank, Suntrust, National City. Okay, you say, if these companies give money to the broker, how does the broker make money–they need to charge above the going rate to make a profit, right? NO! NO! NO! Within each of these companies, like Wells Fargo, etc. there are two divisions. One is the retail division and one is the wholesale division.
The retail division has loan officers out on the street approaching realtors, clients, etc. just like me. The wholesale division has reps that solicit business from loan officers like me–they do not deal directly with the agents or the public. They get their business from mortgage brokers. How can the wholesale reps hope to get any business while they have to compete with their retail counterparts? Because the wholesale money is offered at a CHEAPER rate than the retail money. That leaves room for the broker to make money. The loan closes in the name of the company that lent the money-not the broker.
2. Lender. A lender has what is known as a wholesale line. i.e., a line of 4 million, let’s say. Okay, so GMAC has given the lender a line of moneythat he can lend. Within the lender’s company is a department called secondary. Secondary marks up the money to make the company a profit. The loan closes in the lender’s name.
3. Portfolio Lender. This is like Chevy Chase Bank, or Suntrust or Wells Fargo. These companies usually have both a retail and a wholesale division. These companies can sell their loans or keep them (keep them in their “portfolio”). Loans close in their name.
So do I need to pass out three business cards when giving a lender referral?????
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