After the home buyer has been approved for a home loan and all necessary documents have been submitted, how does the lender receive enough funding to provide the money for the borrower?

The lender is usually seen as the originator. Sometimes the borrower will begin payment to the lender who originated the loan, while other times the loan will be sold to another institution. This information is usually disclosed during the application process where the mortgage broker (loan officer) will show the borrower the percentages of the probability that the loan will be sold to another institution.

Moreover, the institution that the borrower makes their monthly payments to rarely own the loan. These mortgage providers service the loan for the institutions that do own the loans, in turn; the mortgage providers receive a monthly fee for overseeing the payment on the loan. This is how lenders make their money.

All loans are almost always being sold and purchased on a continual basis; it is a never ending cycle. This process of selling and buying home loans is evolved around three institutions: Fannie Mae, Freddie Mac, and Ginnie Mae. These institutions provide the funding for home mortgages.

Furthermore, since the chances are so great that the borrower.s loan will be sold sometime during the repayment process, it is important that the lender overseeing the loan contact the borrower before it is sold because all payment after it is sold will be sent to a new lender. Fraud is rampant, especially for home mortgages, so it is wise not to start paying a new lender until written documentation is received and confirmed.