Most small companies like ours operate as a broker or a correspondent banker and sometimes as both.
What’s the difference and why does it benefit our clients?
A broker operates as a third-party originator where they act to place loans for their clients by finding the right product at the most competitive rates by shopping the end investor. A broker is not considered the lending institution for a client and does not carry the risk of closing a loan that they cannot sell on the secondary market. It’s imperative that a broker aligns itself with great wholesale partners that can operate on fast turn times with a great wholesale price for the broker to offer its clients.
A correspondent lender or banking institution can underwrite and process a loan from start to finish in house without having to wait for third parties to fulfill certain milestones throughout the loan transaction. Almost all small bankers lend with the purpose of making the loan to sell on the secondary market. They can choose to service the loan if they have agency approvals with the GSEs (Fannie, Freddie, and Ginnie). Bankers have a much greater burden of closing a loan that meets regulatory and underwriting requirements. Because of this, the banker generally obtains a significantly improved wholesale price that can be passed on to the client.
West Coast Mortgage Group operates within both channels and runs its business model that avoids unnecessary market risks and focuses on delivering the most competitive price to its clients. The key is an efficient operational model. The operational cost to run a business ultimately is a reflection of the cost charged to close a loans and the APR that a client receives. Our philosophy is less is more. We strive to maintain lowest margins and pass the savings to our clients. We encourage our clients to check out our review’s online.
