Here is a look at the top wholesale lenders in the USA—and why they may be right for you
Mortgages come from two basic types of lenders: retail or wholesale.
The difference between these two types of lenders is that retail lenders work directly with individual borrowers. Wholesale lenders, on the other hand, usually partner with mortgage brokers, who then work with clients to secure the right home loan. If all goes well, that loan is at a discounted rate.
In this article, we will define what wholesale lenders are and how they work. We will also look at the top wholesale lenders in the USA right now. Here is everything you need to know.
What is a wholesale lender in mortgages?
A wholesale lender is an institution that funds mortgages and provides them to third parties. These third parties include mortgage brokers, an independent mortgage professional or company, a bank or a credit union.
Mortgage loans can be made through retail and wholesale channels. Most homebuyers are familiar with retail mortgages, where loans come from a lender and are managed within the same financial institution.
Think of retail lending as your typical mortgage where you submit your application, get approved, and pay at the same bank. By contrast, wholesale lenders do not transact directly with clients. They offer mortgages through authorized third parties. Lenders lay out the terms of the mortgage while brokers match borrowers to loans.
Wholesale lenders: how do they work?
Borrowers usually do not have direct contact with wholesale lenders. The borrower, instead, interacts with the third party. This third party facilitates the loan origination and application process. The third party also communicates throughout the home loan’s underwriting.
Wholesale lenders inform third parties about the loan terms and options. The third party then matches the borrower with the appropriate home loan. After closing the loan, wholesale lenders usually sell them in the secondary mortgage market. This frees up capital to fund more mortgages.
If, for example, you work with a mortgage broker, they will often have existing relationships with wholesale lenders. You might also gain access to competitive rates and more flexible loan requirements and options.
Who are the 10 biggest wholesale lenders in the USA?
There are many wholesale lenders in the USA. These lenders come in different shapes, sizes, and product offerings. Various wholesale lenders also offer direct and hard money mortgages. Let’s look at the biggest wholesale lenders in the USA:
- United Wholesale Mortgage
- Homepoint
- Caliber Home Loans
- PennyMac Loan Services
- Newrez
- Homebridge Financial Services
- Plaza Home Mortgage
- Paramount Residential Mortgage Group
- Angel Oak Mortgage Solutions
- Change Lending
Let’s look more closely at each to see what they have to offer.
1. United Wholesale Mortgage
United Wholesale Mortgage, or UWM, is one of the leading wholesale lenders in the USA. Dominating a 20% market share for wholesale lending, UWM continues to grow. UWM should be top of the list if you are strictly looking for a proven wholesale lender.
One of the main reasons to work with UWM is their lending options and additional resources, which help their entrepreneurial partners grow. In 2022, they closed 654,450 total loans.
2. Homepoint
Homepoint is a major up-and-comer in the mortgage wholesale lending space. Established in 2015, Homepoint is the third largest wholesale lender and the seventh-largest non-bank lender in the USA. This quick success should propel Homepoint onto any list. In 2022, they closed 280,744 total loans. Homepoint also has 1,635 employees (on LinkedIn) and is 72% wholesale.
3. Caliber Home Loans
For nearly 15 years, Caliber Home Loans has been operating in all 50 states. This makes it one of the largest wholesale lenders in the USA.
Caliber Home Loans offers educational resources for its clients who want to make more informed decisions when shopping for mortgage options. Caliber Home Loans closed 266,797 in 2022 and is 26% wholesale.
4. PennyMac Loan Services
The number four top lender in the USA, PennyMac Loan Services is also the fifth-largest wholesale lender in the industry. Among the unique options offered PennyMac Loan Services are lock and shop rates for up to 60 days.
This offers borrowers a considerable amount of flexibility, as well as less pressure. Because it offers options outside of wholesale lending, PennyMac Loan Services is a great resource for borrowers of all types. In 2022, PennyMac Loan Services closed 789,153 total loans.
5. Newrez
Newrez is the sixth largest wholesale lender in the USA. They also offer a wide variety of lending options. Established 15 years ago, Newrez is ideal for mortgage brokers who are looking for a more versatile wholesale lander. In 2022, Newrez closed a total of 336,896 loans.
6. Homebridge Financial Services
One of the top non-bank mortgage lenders in the USA, Homebridge Financial Services has been serving clients for more than 33 years. They offer numerous mortgage lending options, including wholesale loans. Homebridge Financial Services is currently the seventh-largest wholesale lender in the US. In fact, 30% of their volume comes from wholesale lending directly.
7. Plaza Home Mortgage
If you want a custom solution when searching for a wholesale loan, then Plaza Home Mortgage may be the right place for you. In business for more than 20 years, Plaza Home Mortgage brings experience for anyone who wants to work with a highly experienced team. Plaza Home Mortgage has closed 36,610 total loans and is 57% wholesale.
8. Paramount Residential Mortgage Group
Paramount Residential Mortgage Group has been serving its clients with mortgage wholesale loan options for more than two decades. Based in California, Paramount Residential Mortgage Group serves 48 out of the 50 states. As of 2022, 31% of Paramount Residential Mortgage Group’s loan volume comprised of wholesale loans. This is a great option for anyone looking for wholesale home loans for their clients.
9. Angel Oak Mortgage Solutions
Angel Oak Mortgage Solutions was established in 2013 and is headquartered in Atlanta, Georgia. Licensed in 46 of the 50 states, Angel Oak Mortgage Solutions closed 7,333 loans in 2022. Nearly 95% of Angel Oak’s loan volume last year came from wholesale loans.
10. Change Lending
In 2022, Change Lending closed on more than 12,000 loans. Overall, Change Lending offers services like Change Wholesale, Change Appraisal, and xChange, among others. Change Lending’s specific focus is on specialized loan products for underserved communities. In 2022, 44% of Change Lending’s loan volume came from wholesale loans.
Wholesale lenders usually make money by selling their loans on the secondary market.
How do wholesale lenders make money?
Wholesale lenders lay out the terms for how they want their money loaned out and inform third parties. It is then up to the third-party brokers, banks, and credit unions to match the borrowers to the mortgage. After closing, wholesale lenders usually sell their loans on the secondary market. At this point, their capital is refreshed, and they have the money to provide more home loans.
What are the advantages and disadvantages of wholesale lenders?
Wholesale mortgages might be more easily accessible, particularly in areas where mortgage retailers are sparse. Additionally, mortgage brokers will often ask for looser lending requirements compared to loans processed in-house.
While it’s not a guarantee, wholesale loans may also be cheaper since mortgage brokers can match the lowest possible rate to each borrower’s financial situation.
However, using a third party to obtain loans may also entail additional fees. Borrowers can potentially end up paying more in the long run, despite the lower interest.
Transactions may also be slower at times, and some questions or concerns might not reach the lender.
Wholesale lenders: closing thoughts
When deciding on whether to go with a wholesale lender, it is important to know how they differ from retail lenders. If you do go with a wholesale lender, you will want to shop around for the one that will work best for you. It is important to know the differences between wholesale lenders and what each has to offer—as well as the advantages and disadvantages.
Remember: it is important to do your research to see if it is the right move for you.
To find out more about wholesale, get in touch with one of the mortgage professionals we highlight in our Best of Mortgage section. Here you will find the top performing mortgage professionals across the USA.
Did you find this information on wholesale lenders useful? Let us know in the comment section below.
