Retail mortgage branches are very common: they are the organizations that work directly with borrowers to help them with their loan applications and give them common loans like mortgages and auto loans. If you have ever worked with a loan officer at a bank, you have worked with a retail mortgage organization. Large companies like banks cannot easily offer mortgages directly from their home offices, so they create many different branches that can deal directly with local customers.
Retail mortgages are marketed to customers. Not only can lenders reach a larger customer base with retail mortgage branches and products, they can also create advertising strategies specifically for retail mortgage operations. Corporate offices can also move specific marketing and operation functions to these retail ranches that the home offices could not complete as efficiently, separating out different steps in the mortgage process and creating more adaptable, individual units.
Customers also benefit from retail mortgage operations. Because retail mortgages are aimed at individuals and lending officers who work with people in a one-on-one relationship, retail mortgages can often be customized, especially if customer credit is problematic. Retail mortgage branches can also offer specific products, such as turnkey mortgage arrangements and automated underwriting arranged through corporate offices. The branches enjoy the same industry compliance standards that the corporate offices have already set up.
The other primary option for lenders is the wholesale mortgage market. Unlike retail markets, wholesale markets have an extra intermediary, the mortgage broker. Lenders sell mortgage packages to these brokers at reduced rates. The broker adds its own fees and then sells the mortgages to borrowers directly -- after the additional costs, retail mortgages and loans through mortgage brokers have nearly identical expenses. Lenders benefit from the wholesale arrangement because they do not have to create complete retail branches in areas where they want to sell mortgages.