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Many Mortgage Bankers Allow Their Loan Officers to Broker Loans.

Many mortgage bankers allow their loan officers to broker out a mortgage from a wholesale lender if they don't offer a competing product.

Let's say that a new loan program hits the market and all the mortgage brokers are raving about it. This is a common occurrence; mortgage wholesale companies are continually trying to think up new loan programs that will attract new mortgage brokers who will bring them new business.

A real-world example might be the payment-option loan program (discussed in Chapter 7) that made headlines not too long ago. Suddenly, this new loan program hit the streets with great fanfare. Loan officers working for other mortgage bankers that didn't offer that program yelled at their bosses, saying that they were getting creamed on the streets by their competitors, who could offer this new loan program. They asked repeatedly why the firm they worked for didn't have a program just like it.

In cases like these, the mortgage banker may let a loan officer send the loan to a wholesale lender, just like a regular broker would do. Instead of losing the deal altogether, by brokering the loan to a wholesale lender, the loan officer and the banker make a little more money, and the banker has one more happy customer.

In fact, brokering loans is more common than you might think. Mortgage loans that are brokered make up over half of all loans issued in this country—possibly more than that, depending upon which source you read. And they're not all originated by a fully licensed, official mortgage broker.

One of the more common mortgage brokers is your credit union. Many credit unions don't operate like a mortgage banker, with their own credit lines, but instead broker out their mortgages. Sure, a credit union may take your loan application, quote you interest rates, and make you sign lots of papers, but it's acting as a mortgage broker. This is especially true if your credit union is local and not a national organization.

 
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