Mortgage brokers know what each lender is looking for and submit loans that a particular lender is likely to approve. This saves the lender a lot of time and expense since they approve a higher percentage of loans. Lenders have established wholesale divisions and have account representativeson staff just to service their mortgage brokers. There is a lot of competition amongst wholesale lenders to get broker-generated business. Save sales and marketing expense.
Mortgage brokers are responsible for all the sales and marketing required to find clients.
Lenders in effect have a large sales force with little overhead cost. Remember, mortgage brokers obtain rates at wholesale, mark up these rates by adding points and then quote you a retail rate. This is similar to what a travel agent does. Travel agents obtain discount pricing as a result of their volume. These points are paid by the lender and may be known as Premium Pricing, Service Release Premiums, or Rebate Pricing.