Mortgage Broker Company - Where Does Mortgage Money Come From?

You talk to a lender and apply for the loan. The lender does all the processing for you and you move in to your new home. You make the payments to the company who originated the loan or your loan may have been transferred to another institution from your original lender.

The company that you make your payments to is rarely the one who owns your loan.

Your loan gets packaged into a “pool” with many other loans and is sold off to Fannie Mae, Ginnie Mae or Freddie Mac. The servicer of the loan (your lender) gets paid a monthly fee for processing payments and taking care of your loan.

This is where the lenders make money - by receiving this monthly payment. Then the lender gets additional funds so they can make more loans - this is the cycle.