We are often asked what the difference is between a mortgage broker and a mortgage banker.  Here's the difference. 

A mortgage broker is any loan sales person who represents more than one lender.  Some brokers represent a few lenders and others represent dozens of lenders.  When a loan is funded by a mortgage broker, the money comes directly from the lender.  As an example, if the broker is selling a loan from Wells Fargo, the money will be sent by Wells Fargo to the title company. 

A mortgage banker can either be a retail banker or a wholesale banker.  If the mortgage banker is a retail banker, they can only sell loans from the one company they represent.  If a loan officer works for Wells Fargo, they can only sell Wells Fargo loans.  

If the mortgage banker is a wholesale mortgage banker, they can sell loans from more than one lender, just like a mortgage broker.  The difference is that the money for the closing comes from their own line of credit (called a warehouse line of credit).  After the closing, the wholesale banker sells the loan to the lender within a short period of time - usually a few days. 

The advantage of using a mortgage banker is that they have control of the funding.  The advantage of using a broker is that they represent more than one lender, so they may be able to get a loan that is unavailable to a retail banker.  The best option is a wholesale mortgage banker (they represent many lenders and control the funding). 

There is much debate over the advantages of using a retail banker versus a wholesale banker, but the one true difference is that the retail banker has to take a shower every day and wear nice clothes when they report to work at the bank.  A wholesale banker (or broker) can sit at his desk at home in his boxers and a ratty T-shirt.