The mortgage broker is one of three primary channels through which mortgage loans are originated in the US, alongside retail banks and direct lenders. Brokers don’t lend their own money; they originate loans on behalf of wholesale lenders, comparing programs across multiple sources.
How brokers differ from bankers and bank LOs
- Mortgage broker — licensed firm that originates through multiple wholesale lenders. Doesn’t fund the loan; the wholesale lender does
- Mortgage banker (correspondent) — lends its own money, then sells the loan to investors after closing. Has more control over the loan from application to close
- Retail bank LO — works for a specific bank or credit union and originates only that bank’s loan products
Broker market share
Mortgage brokers account for roughly 25-35% of US mortgage originations in 2026, with the share fluctuating based on rate environment and competitive dynamics. Brokers typically excel in product variety (especially non-QM), borrower-fit optimization, and customer service. Bankers and direct lenders typically have advantages in pricing on standard products and in operational scale.
Broker compensation
Brokers can be compensated either by the wholesale lender (lender-paid compensation, LPC) or directly by the borrower (borrower-paid compensation, BPC). LO Comp Rule restrictions apply to broker compensation the same way they apply to LO compensation generally. The compensation arrangement is disclosed on the Loan Estimate.
