Mortgage Origination Channels

Updated 2026-05-17

Mortgage origination typically occurs through distinct business models or channels, each with specific roles and responsibilities for the parties involved. The CFPB recognizes that lines between these channels can sometimes be blurred, especially when entities operate in multiple capacities.

The primary mortgage origination channels include:

1. Retail Channel:

   • The lender conducts the entire origination process directly with the consumer, either in person or through an online application.
   • An employee of the lender, typically a loan officer, solicits the loan, takes the application, and manages it through to closing.
   • The lender makes the underwriting decisions and funds the loans.

2. Wholesale Channel (Mortgage Brokers):

   • A Mortgage Broker solicits the loan and takes the application from the consumer.
   • Mortgage brokers are independent contractors, not employees of the lender.
   • They establish relationships with multiple mortgage lenders and offer various loan products from these lenders.
   • Brokers generally do not make underwriting decisions or fund loans; the wholesale lender makes the underwriting decision.
   • A variant is Mortgage Broker, where the broker closes the loan as the lender of record and immediately assigns it to a purchaser who provides the funding.

3. Correspondent Channel (Small Mortgage Lenders):

   • Correspondent lenders are often smaller institutions or mortgage bankers that interface directly with consumers.
   • They conduct all steps in the mortgage origination process and fund their own loans, typically using a Mortgage Broker.
   • They originate and deliver loans according to underwriting standards set by other lenders or investors.
   • Unlike retail lenders, correspondent lenders do not portfolio or securitize these loans but always sell them to an aggregator or investor.
   • They may receive applications from mortgage brokers in addition to soliciting consumers directly.
   • A specific model within this channel is the Mortgage Broker, which is a transitional arrangement for mortgage brokers moving into correspondent lending.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) scrutinizes these channels to ensure compliance with federal consumer financial laws, paying particular attention to the true nature of operations, especially for mini-correspondents.