A common question from both buyers around Atlanta and from Realtors and others, is what is the difference between a mortgage broker, banker, lender, etc. That is a very good question, and here goes the answer:
- Lender – The ability to structure, underwrite, approve and fund a deal directly, then either service the loan or sell the ‘service release’ to either Fannie Mae or Freddie Mac. This license requires a significant net worth held in the company, which is why most mortgage operations do not have this license. However, this lender license affords the greatest degree of flexibility in underwriting and approving all loans. Phoenix Global Mortgage is a true lender, selling loans to Freddie.
- Correspondent Lender – The ability to underwrite, approve and fund a loan the fits the guidelines of another, larger lender. For example, a loan might be sold to Wells Fargo or Suntrust after it is approved and closed. So, that correspondent lender would underwrite strictly according to Well’s guidelines. The advantage for the borrower? Well, service is better with a smaller lender who does not have the ‘red tape’ of a bigger player.
- Broker – The ability to structure a loan file to fit the guidelines of a lender, then the file is sent to the lender to be underwritten, approved and funded. Advantage: the broker can scan multiple lenders to find the one where a ‘quirky’ loan scenario fits. Disadvantage: timeliness is sometimes compromised, because the file leaves the broker’s office to be underwritten, so the timeline is up to the lender. We currently broker Jumbo loans (> $417K), because jumbo loans are hard to find with good interest rates. We have closed a bunch with our broker relationship, because they are offering 5.5% for loans up to $1.5MM. That is worth a little extra wait on turn times.
- Government Loans – FHA, VA and Rural Housing. These loans are insured by their respective government agencies, for example by HUD in the case of FHA loans. But, HUD does not buy loans like Fannie and Freddie do. They just insure the loan against default. Therefore, different levels of being able to approve these loans exist, commonly referred to as “Full Eagle”, the ability to underwrite, approve and fund FHA loans directly, and “mini-Eagle”, the permission to broker the loans to a lender. Phoenix Global Mortgage is a Direct Endorsement (D.E.) Underwriter and approves these loans directly, and service levels are very quick.
There you have it. We are a true lender, just like the big boys. But, we are small, so service levels are optimal. If you need a mortgage loan, give me a call. I will work hard so that you will be as happy as the last several testimonials that have come my way.
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