A correspondent lender is a unique type of lender that originates, underwrites, and funds a mortgage loan using their name. The correspondent lender will then sell the loan to a larger mortgage lender, who becomes the loan servicer. The loan servicer will be the entity in charge of collecting the monthly payments. The institution that bought the mortgage may turn around and sell it once more on the secondary market, often to a large aggregator like Freddie Mac or Fannie Mae.
You might be wondering who buys these correspondent loans? The same credit unions, banks, and other financial institutions that lend directly to consumers also purchase loans from correspondent lenders. This means that you can take out a loan with a correspondent lender, but a credit union could obtain your loan on the secondary market and become your servicer. By the time they purchase the loan, all of the hard work of the origination process is complete.