DEFINITION of 'Third-Party Mortgage Originator'

1. A person or company involved in the process of marketing mortgages and gathering borrower information for a mortgage application. This information is then transferred or sold to the actual mortgage lender. Mortgage brokers are third-party originators.

2. A person or company that is involved in any aspect of the mortgage origination process (underwriting, closing, funding, etc.) on behalf of the actual mortgage lender.

BREAKING DOWN 'Third-Party Mortgage Originator'

Third party mortgage originations frequently come under scrutiny because of third-party originator's lack of an ongoing and lasting responsibility for the mortgage. For example, once a mortgage broker has been compensated for brokering a mortgage, it no longer has any responsibility for the performance of the mortgage, whereas the lender has a continuing interest and is subject to some recourse should the mortgage default. This has lead to some criticism of third-party originators for overpricing or otherwise selling loans to borrowers that they can't afford.

RELATED TERMS
  1. Mortgage Originator

    An institution or individual that works with a borrower to complete ...
  2. Mortgage Banker

    A company, individual or institution that originates mortgages. ...
  3. Primary Mortgage Market

    The market where borrowers and mortgage originators come together ...
  4. Second Mortgage

    A type of subordinate mortgage made while an original mortgage ...
  5. Mortgage Company

    A company engaged in the business of originating and/or funding ...
  6. No-Cost Mortgage

    A mortgage refinancing situation in which the lender pays the ...
Related Articles
  1. Personal Finance

    Behind the Scenes of Your Mortgage

    Four major players slice and dice your mortgage in the secondary market.
  2. Personal Finance

    Mortgage Broker vs. Direct Lenders: Which Is Best?

    There are key differences between mortgage brokers and direct lenders. Here's how to choose which is best for you.
  3. Personal Finance

    Shopping for a Mortgage? Use This Tool First

    As home-buying technology has progressed, the process of finding the best mortgage rates for 2016 can all be done online.
  4. Personal Finance

    5 Things You Shouldn't Tell Your Mortgage Broker

    Applying for a mortgage can be a strenuous process. Here are five things to avoid doing when meeting with your mortgage broker.
  5. Personal Finance

    Shopping for a Mortgage in 2017? Use This Tool First

    As home-buying technology has progressed, the process of finding the best mortgages rates for 2017 can all be done online.
  6. Personal Finance

    Advantages And Disadvantages Of Using A Mortgage Broker

    Mortgage brokers may be able to find you the loan of your dreams, but you should consider the potential downsides before hiring one.
  7. Personal Finance

    How Do Mortgage Lenders Get Paid and Make Money?

    When homebuyers educate themselves on how mortgage lenders get paid and make money, they are more likely to save thousands of dollars on their mortgages.
  8. Insights

    How Interest Rates Affect the Housing Market

    Understand how rate changes can affect home prices and learn how you can keep up.
  9. Retirement

    Additional Streams of Income for Seniors

    Find out how a reverse mortgage can work in your favor during retirement.
  10. Personal Finance

    Score a Cheap Mortgage, Here’s How

    Hidden costs can create what looks like a good deal. Find out how to find the best mortgage possible.
RELATED FAQS
  1. If my mortgage lender goes bankrupt, do I still have to pay my mortgage?

    Yes, if your mortgage lender goes bankrupt you do still need to pay your mortgage obligation. Sorry to disappoint, but there ... Read Answer >>
  2. What’s the difference between a mortgage lender and a mortgage servicer?

    Buying a home is an exciting and confusing process. Once the loan is secured, it's important to know who gets the payment: ... Read Answer >>
  3. What are the pros and cons of a simple-interest mortgage?

    Learn the difference between a simple interest mortgage and a standard mortgage, along with their relative advantages and ... Read Answer >>
Trading Center