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Unformatted text preview: ompany, bank, thrift association, pension fund, or other lender, it is called a mortgage correspondent. It “corresponds” on behalf of its principals in dealing with prospective borrowers. The mortgage correspondent is paid a fee in exchange for originating, processing, closing, and servicing loans. The firm may be given exclusive territories, in which case the correspondent will be entitled to a fee, even if it had not actively solicited the loan; or it may be nonexclusive, in which case the correspondent is in effect in competition with the lenders that it represents. Whatever the type of arrangement, loan correspondents serve a very valuable function in real estate financing for lenders whose headquarters or principal offices are located great distances from the properties on which they make loans. Correspondents have been especially successful in the Far West, particularly in California. Although most mortgage companies act as correspondents in investing others' funds, there are many firms that invest their own funds exclusively. Another category of mortgage lender is a hybrid, both investing money into real estate trust deeds and mortgages for others in an agency or fiduciary capacity, and its own funds in the role of a principal. CHARACTERISTICS OF MORTGAGE COMPANIES
Type of institution – Brokerage. Mortgage companies do not take deposits, but finance their operations through short–term bank loans, their own capital, and fees from sales and servicing. They routinely sell nearly all the loans they originate, and are minor holders of mortgage debt. In California, mortgage companies are licensed by the Department of Corporations, and they are subject to lending and other general business regulations. Dynasty School (www.dynastySchool.com) 4-7 REAL ESTATE FINANCE
Mortgage companies may also engage in a number of related real estate activities. These include brokerage, development, construction, and property management. This is especially true when activity in the mortgage market slows down. SYNDICATION
A syndicate is an organization of investors pooling capital for real estate investment. Syndic...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10