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Wholesale Mortgages: A Comprehensive Guide for Mortgage Loan Officers

May 6, 2024

If you’re a bank loan officer contemplating a shift to the independent mortgage broker side, this guide is tailor-made for you. We’ll demystify wholesale mortgages and illuminate the unique advantages they present, including cost savings, flexibility, and personalized options that stand out from captive bank loans. Uncover the competitive edge that wholesale mortgages offer and learn how transitioning to a broker-centric approach could be a game-changer in your career.

Key Takeaways

  • Wholesale mortgages often provide substantial cost savings throughout the loan’s lifetime, challenging the misconception that they are more expensive than traditional mortgage options.
  • The operational model of wholesale mortgage lending diverges from retail lending, as it concentrates on underwriting mortgages via brokers rather than direct customer engagement, emphasizing home loans and fostering entrepreneurial growth within the mortgage industry.
  • The independent mortgage side is growing due to competitive rates, efficient processes, and customizable marketing in the wholesale mortgage world, with key players like United Wholesale Mortgage dominating the market and specialty lenders providing niche services for more diverse borrower needs.

Wholesale Mortgage Myths Debunked

Illustration of intersecting street signs for myths and facts

Ever heard the tale that broker-assisted mortgage processes are more costly? Nothing could be further from the truth. Data reveals a different story, with broker-assisted mortgages potentially resulting in an average savings of $9,400 over the life of the loan for home buyers.

Contrary to the whispers in the banking corridors, transitioning from the banking side to the independent mortgage broker side, or even to a credit union, does not mean you’ll be left high and dry.

The truth about wholesale mortgages is a far cry from many of the common myths. Financial savings for clients, support and training for loan officers, and a robust sense of community all make wholesale mortgages an attractive option.

The Wholesale Mortgage Landscape

UWM Holdings Corporation (“UWM”), the parent of United Wholesale Mortgage, the #1 wholesale and purchase mortgage lender in the U.S., today rang the bell alongside mortgage brokers from across the country at the New York Stock Exchange commemorating National Mortgage Brokers Day.

Historically, mortgage brokers held nearly 50% of the market share before the 2008 crisis, a figure that is once more on the rise owing to the diverse loan options they offer. Recent trends show a steady upward trajectory, with the market share for wholesale mortgage brokers currently standing at 22%. This growth is fuelled by better rates, efficient processes, and technology advancements.

Exploring Wholesale Mortgage Lending

Entering the realm of wholesale mortgage lending is akin to starting an adventure in a distinct financial environment. In contrast to retail mortgage lending, wholesale lenders specialize in funding mortgages and offering them through mortgage brokers. They do not conduct transactions directly with clients.

This unique business model enables wholesale lenders to:

  • Focus solely on home loan offerings, unlike retail lenders that offer a variety of financial products
  • Work with numerous financial players
  • Spur entrepreneurship
  • Contribute to economic growth within the mortgage market.

The Mechanics of Wholesale Lending

Within the wholesale lending sphere, the mortgage broker takes on a pivotal role, acting as a go-between for the borrower and the wholesale lender. From the loan origination and application process to communicating throughout the home loan’s underwriting, borrowers interact with the broker, who guides them every step of the way.

The wholesale lender’s role continues even after a loan is closed. They typically sell the loans in the secondary mortgage market, replenishing their capital and paving the way for further mortgage funding. This intricate dance of transactions ensures the wheels of wholesale lending keep turning.

Wholesale vs. Retail Lenders

It’s important to differentiate between wholesale and retail lenders when navigating the mortgage market. Retail lenders are akin to a department store of finance, providing a wide assortment of home financing options along with a range of other financial services.

In contrast, wholesale lenders are the niche boutiques of the mortgage world, dedicating themselves exclusively to home loans. This focused approach allows them to hone their expertise and offer bespoke mortgage solutions tailored to the individual needs of homebuyers.

Identifying Top Wholesale Mortgage Lenders

Among the most prominent wholesale mortgage lenders, including Paramount Residential Mortgage Group, are United Wholesale Mortgage and Newrez LLC / Caliber Home Loans. As a wholesale mortgage lender, United Wholesale Mortgage, headquartered in Pontiac, MI, dedicates 100% of its volume to wholesale and holds a 20% market share in the wholesale lending channel.

Newrez LLC, after merging with Caliber Home Loans, operates out of Fort Washington, PA, and engages a smaller ratio of its business in wholesale volume.

Specialty Lenders: Niche Markets and Services

Wholesale mortgage offerings are not a one-size-fits-all proposition. Specialty lenders with Non-QM Loan Programs offer access to more nontraditional and portfolio lending programs to meet the diverse needs of borrowers. This breadth of options empowers independent mortgage brokers to assist those who might otherwise be turned away by conventional financial institutions, which typically cater to a narrower clientele based on stringent income, credit, and employment criteria.

For instance, the Debt Service Coverage Ratio (DSCR) loan caters to the unique needs of rental property owners. Similarly, the All-In-One Loan combines home financing & personal banking into one fluid offset account, providing a unique solution for borrowers. Additional niche loan products include:

  • Alternative Credit
  • Alternative Income
  • ARM (Adjustable Rate Mortgages)
  • Asset Depletion
  • Bank Statement Loans
  • Bridge Loans
  • Cash Purchase
  • Commercial
  • Construction
  • DPA (Down Payment Assistance)
  • DSCR (Debt Service Coverage Ratio)
  • Fix & Flip
  • Foreign National
  • HELOCs (Home Equity Line Of Credit)
  • ITIN (Individual Taxpayer Identification Number)
  • Land Loans
  • Lock & Shop
  • Manual Underwrites-Agencies
  • Marijuana Industry Borrowers
  • No Credit
  • Non-Warrantable Condos
  • Rate Buydowns
  • Renovation Loans
  • Reverse Mortgages
  • Unique Property Types
  • Loans in an LLC or Trust

Advantages of Choosing a Wholesale Mortgage

For mortgage brokers, a wholesale mortgage is a powerful tool in your arsenal. It’s your ace in the hole for offering competitive rates that can undercut traditional lending institutions, providing a financial win for your clients over the duration of their mortgage.

Your ability to tap into a pool of wholesale lenders means you can present a variety of flexible loan requirements and options, tailoring the mortgage experience to the individual needs of each borrower. The nature of wholesale lending, which excludes direct consumer engagement, can lead to more lenient eligibility criteria and operational cost savings—advantages you can pass on to your clients.

Ultimately, by choosing to work with a wholesale mortgage, you’re positioned to deliver both cost-effective and highly customized mortgage solutions, enhancing your service offering and reinforcing your role as a trusted advisor in the homebuying journey.

Strengthening Your Brokerage with Wholesale Partnerships

Embracing a partnership with a wholesale lender can revolutionize your brokerage’s operations. As a mortgage broker, your expertise is invaluable in forging the link between homebuyers and the array of wholesale lenders in your network.

How Brokers Facilitate Wholesale Mortgages

A mortgage broker’s role in facilitating a wholesale mortgage includes:

  • Guiding borrowers through the loan application process
  • Collecting and organizing necessary documents
  • Submitting the loan application to the lender
  • Coordinating with the lender’s underwriting team

This process simplifies the borrower’s journey and ensures that all necessary steps are taken to secure the mortgage with a reliable mortgage lender.

Moreover, brokers offer borrowers access to a wider selection of loan options, including those tailored to individuals with lower credit scores. However, it’s worth noting that their involvement may introduce additional fees and potential communication delays due to the multi-party nature of wholesale mortgage transactions.

Understanding Different Loan Products

By offering a spectrum of loan programs with various interest rates and credit terms, wholesale mortgages can accommodate a wide array of borrower needs. For example, Adjustable-Rate Mortgages (ARMs) start with a fixed interest rate that later adjusts based on market rates, potentially suitable for short-term homeownership or rapid payoff scenarios.

Wholesale lenders provide options that cater specifically to different types of borrowers. This tailored approach allows brokers to match borrowers with the most suitable loan products, ensuring a fit that meets their unique needs and circumstances.


If you’re a bank loan officer on the brink of venturing into the independent mortgage broker realm, let’s recap what you’ve learned about wholesale mortgages. We’ve shattered some common myths, given you a tour of the wholesale mortgage process, and highlighted the dynamic market landscape. You’ve discovered the pivotal role of mortgage brokers and the array of benefits that wholesale mortgages bring to the table. With a focus on personalized, competitive, and flexible home financing solutions, stepping into the wholesale mortgage space could significantly enhance your service offerings and elevate your career. For loan officers poised to make a switch, embracing wholesale mortgages is a strategic move towards a future of broader opportunities and greater independence in the mortgage industry.

Frequently Asked Questions

Who is the largest wholesale lender in the US?

The largest wholesale lender in the US is United Wholesale Mortgage.

Can bank loan officers find success with wholesale mortgages?

Absolutely! For bank loan officers considering a transition to the independent mortgage broker world, wholesale mortgages offer a viable and often advantageous pathway. By partnering with a wholesale lender, you can tap into a diverse range of loan products and competitive rates that may not be available within the traditional banking system. This shift can empower you to better cater to your clients’ unique financial situations with tailored solutions that enhance your service offerings.

What is the difference between wholesale and retail mortgage?

The main difference between wholesale and retail mortgage lies in the access to multiple lenders and loan products. Wholesale mortgage brokers offer a variety of options, while retail lenders are limited to in-house products. This makes it easier to find a suitable loan with a wholesale mortgage broker.

What are the advantages of a wholesale mortgage?

The main advantages of a wholesale mortgage include competitive rates compared to traditional lenders, potential cost savings over the loan term, and greater flexibility in loan requirements and options for a more personalized choice. Overall, opting for a wholesale mortgage can result in significant financial benefits for the borrower and tailored lending options.

How do mortgage brokers facilitate wholesale mortgages?

Mortgage brokers facilitate wholesale mortgages by guiding borrowers through the loan application process, offering access to a wider selection of loan options, and coordinating with the lender’s underwriting team. This is essential in meeting the diverse needs of borrowers.

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