Mortgage banks are the set of companies that sell loans to other companies and loan investors. They allow for mutually beneficial relationships between borrowers and lenders - the borrower gets money now, and the lender gets the interest that will accrue.

Mortgage bankers work by creating a huge resource base consisting of loans of various types. Loans may be serviced by mortgage bankers and most of them operate through wholesale lending departments. Most banks, non-banking financial organizations and loan investors pick up loans from the market. This is because loans are often considered long-term investments.

According to the performance of the economy, the fortunes of mortgage bankers vary. Most mortgage bankers buy out loans when the outlook of the economy is stable or is witnessing steady growth. In contrast, primary lenders often provide loans to customers when the economy is down, unemployment high, and there is demand for money in the market. This lender sells off these loans to mortgage bankers when the economy gets back on track. Often the primary lender charges a premium for each loan that he sells to a mortgage banker.

Some mortgage transactions may also involve mortgage brokers. These brokers often act as intermediaries in sale of loans to mortgage bankers. Mortgage bankers act as wholesale lenders and cater to mortgage brokers for obtaining loans from the primary market. Some mortgage bankers offer loans to brokers at below market rates. These brokers then lend the money to a customer and charge a fee in between. Thus the client ends up getting money at market rates.