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Unformatted text preview: man, the financial intermediary pools funds from many sources (individual savers or other short–term or long–term investors) and converts them into loans suitable to the needs of individual borrowers. By focusing on particular markets (investment funds to purchase housing, for example) the intermediary acquires special competence in a specific field and is able to pass on cost savings and other benefits to investor and borrower alike. Advantages/Disadvantages – The “loan officers” of these institutions provide valuable services to prospective borrowers and to real estate brokers and their customers. Each loan officer, however, is marketing the loan programs of that one institution and may be promoting programs designed to meet that institution's needs in a constantly changing money market. Another advantage is that an institution may give preferential treatment to its regular customers. MORTGAGE COMPANIES
Mortgage companies, or mortgage bankers, make mortgage loans and sell them to investors. They “originate, finance, and close first mortgage loans secured by real estate and sell such loans to Institutional investors for whom the loans are serviced under a contractual relationship.” Loan Correspondents – Mortgage companies operate primarily as mortgage loan correspondents of life insurance companies, mutual savings banks, pension funds, and other financial institutions. They may furnish mortgage loans to these institutions which are located in only one
Dynasty School (www.dynastySchool.com) 15-15 REAL ESTATE FINANCE
local area, one state, or in several states. The mortgage companies, with their loan brokerage functions, are one of the prime sources for mortgage loans on homes, on income property, and under FHA and DVA programs are the largest originators of government insured or guaranteed loans to moderate income groups. Source of Funds – Many mortgage companies have sizable funds of their own and are consistent lending sources in the mortgage market and also engage in additional business operations such as property rentals, leases, m...
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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