An institution which is lending their own money and originating loans for itself is called a whole sale mortgage lender or a portfolio lender. This is because they are lending for their own portfolio of loans and not worried about being able to immediately sell them on the secondary market. A true mortgage banker is a lender that is large enough to originate loans and create pools of loans which they sell directly to Fannie Mae, Freddie Mac, Ginnie Mae, jumbo loan investors, and others. Most mortgage bankers act as wholesale mortgage lenders, catering to mortgage brokers for loan origination. Some wholesale lenders do not even have their own retail branches, relying solely on mortgage brokers for their loans. These wholesale divisions offer loans to mortgage brokers at a lower cost than their retail branches offer them to the general public. The mortgage broker then adds on his fee. The result for the borrower is that the loan costs about the same as if he obtained a loan directly from a retail branch of the wholesale lender.

Wholesale mortgage lenders deal solely with brokers, as distinguished from retail lenders who deal directly with borrowers. Retail lenders use their own employees to perform the functions that mortgage brokers perform for wholesale mortgage lenders. For this reason, retail prices are higher than wholesale prices. Both types of lenders deliver price sheets every morning, using fax, electronic networks or the Internet. Retail lenders deliver the price sheets to their employees and wholesale lenders further deliver them to their brokers. For example, the wholesale lender posts a price for a 30-year fixed-rate mortgage of 6 percent and 0 points. The broker adds a 2-point markup, quoting 6 percent and 2 points to the borrower.

Thus a wholesale mortgage broker saves time and money as mortgage broker does all the legwork of finding customers, pre-qualifying them and putting together their loan package. In return wholesale mortgage lenders are able to offer discounted pricing to mortgage brokers.