Sources of Conventional Loans

The main sources of conventional money are mortgage bankers and mortgage companies, commercial banks, and savings banks.

Every lender has to adhere to certain state or federal agencies' regulations; but beyond that, what a lender does is a matter of company policy. For example, no regulation dictates what interest rate a lender should charge. That decision is up to the lender. Besides interest rate, there are many other financing terms and conditions for which each lender sets its own policy, based on market (business) judgments. Again it must be stressed that this applies only if the lender is making a loan that it is going to keep in its inventory, the so-called portfolio loan.

But if a conventional lender wishes to resell the loan to the Federal National Mortgage Association (Fannie Mae) or the Federal Home loan Mortgage Corporation (Freddie Mac), the lender must stick to standards established by these major loan purchasers.

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