Mortgage banking is meant for a single purpose, which is to service the real estate finance sector. These banks are state-licensed entities from which consumers can get mortgage loans directly.
Usually, these institutions use their own funds or avail from the Federal National Mortgage Association (FNMA), also known as Fannie Mae, the Federal Home Loan Mortgage Corporation (FHLMC), also known as Freddie Mac, or any other large companies, which are related to the secondary market.
Specialize in Mortgage Loans
Unlike a savings bank that is federally chartered, in general, these banks specialize in only providing mortgage loans. Hence, customers do not deposit their money with them. The secondary wholesale market is their primary source of funds.
Differ in Size
While some banks can be nationwide, others can originate a volume of loan that can exceed that of a national commercial bank. Many of these institutions utilize specialty servicers like Real Time Resolutions, to carry out tasks like fraud detection and repurchase.
Two Sources of Revenue
The two main sources of income are from loan servicing fees (if they are into loan servicing), and loan origination fees. These bankers, by and large, are choosing not to service the loans they have originated. That is because they are entitled to earn a service-released premium, by selling them soon after the loans are closed and funded.
The investor in the secondary market that purchases the loan has the ability of earning revenue for servicing of the loan, for each month that the loan is kept by the borrower.
Different Banking Laws Apply
Mortgage banks usually operate under banking laws that are quite different, according to the state they operate in. You will need to check each individual state's banking or financial department in order to get a list of such bankers in each state.
While federal laws apply to the operation of a commercial bank, in terms of consumer protection, usually, consumers have additional rights under the applicable state law.
More Competitive in Lending
As they only specialize in lending and not have to subsidize any losses, other departments may have incurred, mortgage bankers can be competitive when it comes to mortgage loans. However, they usually don't have the advantage of accessing adjustable, low cost rate mortgages, which federal banks are typically associated with, and access to federal money.
Career in This Field
Professionals in the job market today need to have a college degree in business or finance, or some specific experience or training related to the field. Skills in good customer service, an inherent ability with numbers, and computer skills are also essential requirements for such jobs.
The job involves reviewing credit scores, determining the kind of loan that is most beneficial for the customer, and guiding them through the process of application as well as closing.
The loan officer has to be very organized and detail-oriented, and needs to be able to handle the large amounts of paperwork and reporting that are required for getting loans approved, up to the closing. He also has to have a thorough know-how about the regulations associated with federal and other types of mortgages that a consumer can apply for.