A correspondent lender originates, and unlike a mortgage broker, underwrites, and funds mortgage loan using their own funds.
[1] The initial loan is usually made in the name of the correspondent lender, and then after closing, the loan is either sold to a larger primary lender or on the secondary mortgage market.
Some banks act like as correspondents, making mortgages in their own name, but later selling those notes to a larger institution.
Correspondent lenders may, in some cases, continue to service the loan, keeping the loan in their name, while collecting a fee from the primary lender who now holds the note.
[3] Correspondent lenders usually underwrite their loans according to the guidelines of the larger lender, allowing for the loan to be sold quickly.