Bank Loan Officers /Retail Banks:
What's in it for me?
Loan officers at banks, credit unions or other lending institutions are employees who work and process mortgages that are originated by their employer. They are often paid a salary plus commission. The loan officer is limited to their own bank loan programs and guidelines. Rarely does a bank have the versatility or expanded solutions for loans since they are the lender.
Banks typically have what is called "in-house" underwriting, which means they have a salaried on staff underwriter who directly underwrites the loan on site. Banks usually are more strict with thier underwriting guidelines since it is more probable that the bank will service the loan. Banks usually only like to lend to a stronger credit scored/ stable customer.
Retail Banks typically offer lower interest rates, lower closing costs, and can be quicker in closing thier loans.
The downside to using a Retail Bank such as Countrywide or Wells Fargo is that they have only an isolated amount of products that they service and can offer you.
Mortgage Brokers/Brokering:
How are they different?
Mortgage brokers are licensed professionals who are paid a fee to bring together lenders and borrowers. They usually work with dozens or even hundreds of wholesale lenders, not as employees, but as freelance agents. Think of Mortgage Brokers as your scouts. They find and evaluate each person's credit and financial situation to determine which lender is the best fit for that person's needs. The broker may submit the home buyer's application to one or more lenders. A good mortgage broker can find a lender for just about any type of credit or situation. The mortgage broker earns a fee only if they get the transaction approved. Because brokers buy at wholesale prices they can meet or beat the retail bank rates.
The downside to using a Mortgage Broker is making sure to find a Knowledgable Professional. Sometimes Mortgage Brokers get a poor Reputation due to Lending Market Conditions with Wholesale Lenders who have the ability to change thier Lending Criteria without notice to the Mortgage Broker causing delays and sometimes loan denials.
Wholesale Lenders/Lending Investors:
Who are they?
A wholesale lender is a lender who has the funds for extending loans and employs mortgage brokers to find their loans. A large lending institution may have a retail and a wholesale lending division.
Wholesale lenders specialize in different type of loans. The following are examples of different wholesale lenders categories:
- Subprime
- Reverse mortgage
- Alt-A
- Manufactured homes
- Commercial
- Investment properties
- Multi unit
- Raw land, etc.
Wholesale lenders offer the best mortgage rates but a borrower usually works with a retail lender, correspondent lender or a mortgage broker. Thus, they have to pay the loan provider's fee which would be avoided if wholesale lender was directly contacted.
The best Mortgage Brokers/Bankers available have in house underwriting capability through being Hud approved and carrying a wharehouse line of credit. This means they close the loan in thier Corporate Name and after closing sale the loan to the Wholesale Lender. | 
