What Is a Correspondent Mortgage Lender?
A correspondent lender is similar to a mortgage lender. A correspondent lender determines if a mortgage loan will be extended to a client, and can decide to fund the loan with private funds.
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Disclosure
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When using their own money to fund a loan, a correspondent lender doesn't have to disclose all costs associated with the loan.
Funding Lenders
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Correspondent lenders use monies from one loan to fund another, or they can sell the loan to a funding lender. Several funding lenders can be used by a single correspondent lender.
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Terms
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As a borrower, you have the right to ask questions. You should always ask if you are dealing with a lender or broker. In order to find the best loan to fit your need, you should also ask questions about fees, costs, and the terms and conditions of the loan.
Licensure
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A correspondent mortgage lender must be licensed by the state in which they operate. The state requires the correspondent lender to prove that they are able to maintain a verified annual net worth of $25,000 as part of their condition of licensure.
Expert Insight
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In order to protect yourself against unscrupulous business practices, it's important to verify that a correspondent mortgage lender has had no complaints registered with the state, federal regulators or the Better Business Bureau. You can also verify with the state the number of years that the correspondent mortgage lender has been in operation.
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References
- Photo Credit brick home entrance image by Donald Joski from Fotolia.com
