This is as opposed to a portfolio lender who originates loans and keep all of them for themselves.
Sometimes also known as a mortgage bank, such companies carry little risks as not holding on to the loans eliminates the problems of borrower defaults.
However, having no ownership on the loans they underwrite can make mortgage companies susceptible to making credit easily available to borrowers.
Because the problems associated with delinquencies and defaults are someone else’s problems, they might care little about the quality of customers they are acquiring.
The more loans they approve and disburse, the more revenue they generate for themselves.
But with little assets, they have a constant need to acquire more customers in order to maintain the cash flow to keep business operations running.