A Closer Look at Mini-Correspondent Lending

  • November 28, 2014

You may have heard of a newer type of mortgage lender called a “mini-correspondent.” What is a mini-correspondent and what makes it different than other types of mortgage lenders?
 
As the name implies, “mini” refers to a smaller version of a correspondent lender, which is a special type of mortgage lender that originates and funds loans in its own name. Correspondent lenders can then sell their closed loans on the “mortgage secondary market,” where mortgage originators and mortgage investors get together to do business.
 
Correspondent lenders have their own mortgage underwriting staff and fund the loans with their own money. (This is in contrast to a mortgage broker, which doesn’t do any underwriting, loan approval or funding in-house.)
 
The biggest difference between a mini-correspondent and a correspondent lender is that the “mini” version has a smaller net worth. Mini-correspondents increase the amount of funds they have available to lend by establishing relationships with one or more investor relationships.
 
Mini-correspondents access these investor funds by drawing from warehouse (credit) lines. As these loans are sold in the secondary mortgage market, the warehouse line is replenished and those funds are available to assist the next homebuyers. In this way, mini-correspondents can continue to supply a steady stream of mortgage financing.
 
Like correspondent lenders, mini-correspondents originate and close loans in their own names and are responsible for such mortgage processing activities as issuing disclosures, quality control policies, regulatory compliance at both federal and state levels, funding review and appraisal ordering. In mid-2014, the Consumer Financial Protection Bureau (CFPB) issued guidelines for the operation of mini-correspondents covering these very topics.
 
Since 2013, CMG Financial has successfully served the growing mini-correspondent market. 

Latest Tweets

© CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc., NMLS ID #1820 in most, but not all states. CMG Mortgage, Inc. is an equal opportunity lender with corporate office located at 3160 Crow Canyon Road, Suite 400, San Ramon, CA 94583 888-264-4663. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No. 4150025; AK #AK1820; AZ #0903132; Colorado regulated by the Division of Real Estate; Georgia Residential Mortgage Licensee #15438; Illinois Residential Mortgage Licensee; Kansas Licensed Mortgage Company #MC.0001160; Massachusetts Mortgage Lender License #MC1820 and Mortgage Broker License #MC1820; Mississippi Licensed Mortgage Company Licensed by the Mississippi Department of Banking and Consumer Finance; Licensed by the New Hampshire Banking Department; Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker – NYS Department of Financial Services; Ohio Mortgage Broker Act Mortgage Banker Exemption #MBMB.850204.000; Licensed by the Oregon Division of Financial Regulation #ML-3000; Rhode Island Licensed Lender #20142986LL; and Licensed by the Virginia State Corporation Commission #MC-5521. CMG Mortgage, Inc. is licensed in all 50 states and the District of Columbia. Offer of credit is subject to credit approval. For information about our company, please visit us at www.cmgfi.com. To verify our complete list of state licenses, please visit www.cmgfi.com/corporate/licensing and NMLS Consumer Access (www.nmlsconsumeraccess.org).