Banker Vs. Broker - What is the Difference?

We are often asked what the difference is between a mortgage broker and a mortgage banker. Here's the difference.

A mortgage broker is any loan sales person who represents more than one lender. Some brokers represent a few lenders and others represent dozens of lenders. When a loan is funded by a mortgage broker, the money comes directly from the lender. As an example, if the broker is selling a loan from Wells Fargo, the money will be sent by Wells Fargo to the title company.

A mortgage banker can either be a retail banker or a wholesale banker. If the mortgage banker is a retail banker, they can only sell loans from the one company they represent. If a loan officer works for Wells Fargo, they can only sell Wells Fargo loans.

If the mortgage banker is a wholesale mortgage banker, they can sell loans from more than one lender, just like a mortgage broker. The difference is that the money for the closing comes from their own line of credit (called a warehouse line of credit). After the closing, the wholesale banker sells the loan to the lender within a short period of time - usually a few days.

The advantage of using a mortgage banker is that they have control of the funding. The advantage of using a broker is that they represent more than one lender, so they may be able to get a loan that is unavailable to a retail banker. The best option is a wholesale mortgage banker (they represent many lenders and control the funding).

There is much debate over the advantages of using a retail banker versus a wholesale banker, but the one true difference is that the retail banker has to take a shower every day and wear nice clothes when they report to work at the bank. A wholesale banker (or broker) can sit at his desk at home in his boxers and a ratty T-shirt.