Loan Holder

The mortgage business is a complicated and ever-changing industry. It is important that you understand how the mortgage market works and how the lenders make their profit. In doing so, you will gain an appreciation of loan programs and why certain loans are offered by certain lenders. There are several categories of lenders that are discussed in this article, and many lenders will fit in more than one category. In addition, some categories of lending are more of a lending “style” than a lender category; this concept will make more sense after you finish reading this article.

Institutional Lenders The first broad category of distinction is institutional versus private. Institutional lenders include commercial banks, savings and loans or thrifts, credit unions, mortgage banking companies, pension funds, and insurance companies. These lenders generally make loans based on the income and credit of the borrower, and they generally follow standard lending guidelines. Private lenders are individuals or small companies that do not have insured depositors and are generally not regulated by the federal government.