The correspondent lender model is a hybrid between retail origination and wholesale lending. Correspondent lenders fund their own loans (unlike brokers) but then sell the closed loans to a larger correspondent buyer rather than holding them or selling directly to GSEs.
How correspondent lending works
- Smaller lender (often a community bank or regional IMB) originates and funds the loan
- Loan closes in the correspondent lender’s name
- Within 1-30 days, the correspondent lender sells the closed loan to a larger correspondent buyer
- Correspondent buyer takes ownership of the loan, often servicing it or selling further to GSEs
Why use the correspondent model
For smaller lenders, selling loans to a correspondent buyer is operationally simpler than dealing directly with Fannie Mae, Freddie Mac, Ginnie Mae, or private investors. Correspondent buyers handle the secondary market mechanics; the correspondent lender focuses on origination. This is especially useful for community banks that want to offer mortgage products without building out a full secondary market operation.
Common correspondent buyers
Wells Fargo, Chase, Truist, AmeriHome, Cardinal Financial, NewRez, others. Most major retail and IMB lenders also operate correspondent channels alongside their retail and wholesale operations.
