What distinguishes a mortgage banker from a mortgage broker?

The distinction between a mortgage banker and a mortgage broker is primarily centered around their roles in the lending process. A mortgage banker originates and funds loans using their own capital. Once a loan is created, they may sell this loan to investors in the secondary market, such as Fannie Mae or Freddie Mac. This means they are directly involved in the entire lifecycle of the loan, from application to funding.

On the other hand, a mortgage broker acts as an intermediary. Their primary function is to connect borrowers with lenders, helping to find a loan that meets the borrowers' needs. They do not use their own funds to finance loans; instead, they facilitate the loan process and earn a commission from the lenders for the business they bring them.

The clarity provided by this distinction outlines why the role of a mortgage banker is fundamentally different from that of a mortgage broker, making the correct choice the one that highlights these functional differences between the two.