Which type of lender typically uses its own funds to fund loans sold in the secondary mortgage market?

A mortgage banker is a type of lender that typically uses its own funds to originate loans that are later sold in the secondary mortgage market. This practice is significant in the real estate financing landscape because mortgage bankers have the ability to provide quick funding for loans due to their proprietary source of capital. Once they originate these loans, they often sell them to investors in the secondary market, allowing them to recoup their capital and possibly originate more loans. This model contrasts with other types of lenders who may not use their own funds in the same way.

In this context, mortgage brokers primarily act as intermediaries between borrowers and lenders, facilitating the loan process rather than using their own funds. Credit unions and commercial banks typically provide loans using deposited funds and may not directly engage in the origination of loans for sale in the secondary market to the same extent as mortgage bankers. Therefore, the role of a mortgage banker in this process is particularly focused on leveraging their capital for the origination of loans intended for future sale.