Portfolio Lender vs. Mortgage Banker
Portfolio lenders raise money from private investors to fund loans. Mortgage bankers fund loans using a warehouse line to ultimately sell to institutional investors. A host of mortgage bankers have evolved over the past couple years as institutional appetite for riskier loan products has increased. Mortgage bankers pricing and ability to fund loans are highly influenced by Wall Street's appetite or aversion to risk. As a result, loans may stay in a pipeline for weeks and months while a mortgage banker adjusts to radical market swings. This puts a brokers loan submissions at risk. In contrast, portfolio lenders are less impacted by market swings and institutional investor appetite. As long as portfolio lenders continue to offer their investors attractive risk adjusted returns, investment capital continues to be plentiful and as a result loan submissions continue to be funded quickly. Portfolio lenders do not have to wait for institutional lenders to purchase loan pools to clear warehouse lines for future fundings.
Ask your hard money lender whether they are a banker or portfolio lender. Make sure your loan submissions are not stuck in a backlog because of recent market changes.
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