I once had a client leave me for an “incredible” rate. He called me from the signing table because the mortgage banker left somehow forgot to tell his clients with high 700 credit scores that he had tacked on a prepay. No wonder he could offer such a sweeter deal. My client walked from that LO and returned to the transaction we originally had.

Thanks!

You make sense, but there is still no answer that satisfies.

I considered the quality of loan issue, but that still doesn’t account for that big of a spread.

Why would their Jumbo 30 be less expensive than the conventional?

I can be patient for the answers to important questions. The trick is figuring out which ones are important!

Will, best of luck, thanks for reporting.

Do you mean MSR? Mortgage Servicing Right? Yeah banks do originate for that, but they have to be able to sell their loans to do that.

Focus on the model. Each bank has a different market segment they target, they have different cost structures, distribution channels, marketing, advertising, originating parameters, view on interest rates, borrowing costs, risk profile, prepayment speeds, etc, etc. I can go on and on, but I hope you get the point.

Just because they can buy it through wholesale,(other banks) doesn’t mean they truly understand or know about the customer of that particular loan. By originating in house they know the customer better and are more comfortable with the performance.

That doesn’t stop them from buying through wholesale. In fact they still do when they pool their loans, but it depends on the price and again, whatever their model tells them the loan is worth.

Hope that makes sense, but then again what do I know? I’m not a financial wizard, but I did stay at a holiday inn!