What are mortgage banks?
A mortgage bank is a bank that specializes in originating mortgage loans to consumers by backing the funds for a loan. After the loan is originated, often it is sold to another investing source.IdentificationMortgage banks are sometimes confused with mortgage brokers, who sell mortgages on behalf of businesses or middlemen, but don’t back their own loans.FunctionAfter providing a line of credit to a borrower, a mortgage bank usually sells the loan to another investor to recoup the money for the loan, which enables these banks to provide a mortgage to the next consumer.SizeMortgage banks vary in size. Some mortgage banks are able to serve customers nationwide, while others are much smaller, but all must be licensed by each state they do business in.SignificanceMortgage banks began to grow beginning in the 1980s.
