There seems to be a lot of incomplete or inaccurate information floating around about the role of the various principals in lending. Some generated by brokers/lenders themselves.

To qualify my statements I am a REALTOR. However, I was CEO of a bank, I also owned my own brokerage company and I also worked in several capacities with a large regional Mortgage Banker. Over the years I have run loan servicing, ran a secondary market department, ran a wholesale loan department and also spent time in the origination trenches.

The argument or discussion of who/ what is best to use for a mortgage really all comes down to level of service. Whether it is a Banker, Broker or Mortgage Banker. The real question is who can give your client the best level of service with fewer delays and less chance of fall out.

All three of the above, if they intend to originate loans over a period of time, need to deal with disintermediation. That is bringing the mortgage market from NYC to their backyard (or wherever it is). To do so requires conformity, standard documentation and standard underwriting. To simply say (as many bankers do) "we only originate loans for our portfolio and keep all our money at home therefore we can make any loans we want" is to fly in the face of reality. At some point in time, they will be faced with liquidity issues and a way to solve them is secondary market activities (buying and or selling loans... which have been standardized). So while many small to medium sized banks like to use this argument to set themselves apart, in reality, over time, they will need to conform. However, they may have a few programs tailored to special markets or supported by loan commitments with other lenders that allow them "special" programs. When available these programs are great and fit a need. But they are limited to amount of assets, commitment size and usually standard documentation and underwriting. There are a few Giants out there that have soooo much in assets that they can dominate a particular type of product in the market... WAMU, Wells Fargo and BfoA all come to mind. But they too have limits and from time to time stop originating special programs. They also run very large secondary market operations and are always on the lookout for investors for special products and ways to create demand on the sales side for products offered on the mortgage (both wholesale and originations) side.

Mortgage Brokers are at the mercy of Banks and Mortgage Bankers. A mortgage Broker typically has no commitments of their own (for mortgages) to sell against. Rather they are originating loans against a master commitment that a Bank or a Mortgage Banker has obtained. Daily these can change. Mortgage Bankers and Banks go into the Secondary Market  and obtain commitments for loans . It is cheaper to work through a Mortgage Broker to fill commitments and often quicker and more flexible than to have hard established offices. The commitments come from investors and can vary day to day and minute to minute as to rate and terms (depending on the larger Financial Market). The Bank and Mortgage Bankers then make the commitments available to the Mortgage Brokers... in a sense,  IF you had access to all activity going on you could always beat the terms and costs of a Mortgage Broker as they are acting as a middle man. But in truth you don't have the time and they are providing a huge service. Often your friendly Mortgage Broker (who has hundreds of sources for loans) may be selling to your friendly Banker who has just plain vanillia loans available to you locally. The commitment the Mortgage Broker is using might be several days or months old. To the frustration of Bankers they have to compete with themselves.... The local branch vs the wholesale (that works with Mortgage Brokers and Bankers) side. It is all based upon local competition, and regional/national needs of the bank for matched maturities on money coming in vs available investments vs loan sales commitments. To a very limited extent Banks and Mortgage Bankers have the ability of tailoring special loans to a certain market, much like Krogers creates loss leaders to get people in the doors.

If all this isn't confusing enough the Mortgage Banker is a hybrid. Like a Mortgage Broker they may sell loans directly to some other entity against a prior commitment . Or they have the horses to go and get their own commitments for loans and originate against it. To help fill it they may obtain loans from a Mortgage  Broker and even from a Bank that in turn got loans from a Mortgage Broker. Like a bank a Mortgage Banker also has their sources of capital. These sources or pools allow the Mortgage Banker to originate loans from various sources and wharehouse them until they are sold into a commitment and even in a few instances from their own portfolio. Many Mortgage Bankers are owned by banks thus further blurring the distinction.

There are many similarities and there are a few dissimilarities. They all do the same basic thing. From one day to another any may have the "best" deal out there. What is important is consistency, ethics, ability to close and ability to obtain the commitment for your buyer. All the other aspects pale in light of these three.