Mortgage Bankers

Mortgage Bankers are lenders that are large enough to originate loans and create pools of loans which they sell directly to Fannie Mae, Freddie Mac, Ginnie Mae, jumbo loan investors, and others. Any company that does this is considered to be a mortgage banker.

Some companies don’t sell directly to those major investors, but sell their loans to the mortgage bankers.  They often refer to themselves as mortgage bankers as well. Since they are actually engaging in the selling of loans, there is some justification for using this label. The point is that you cannot reliably determine the size or strength of a particular lender based on whether or not they identify themself as a mortgage banker.

Porfolio lenders

An institution which is lending their own money and originating loans for itself is called a "portfolio lender." This is because they are lending for their own portfolio of loans and not worried about being able to immediately sell them on the secondary market.  Because of this, they don't have to obey Fannie/Freddie guidelines and can create their own rules for determing credit worthiness. . Usually these institutions are larger banks and savings & loans. 

Quite often only a portion of their loan programs are "portfolio" product. If they are offering fixed rate loans or government loans, they are certainly engaging in mortgage banking as well as portfolio lending.

Once a borrower has made the payments on a portfolio loan for over a year without any late payments, the loan is considered to be "seasoned."   Once a loan has a track history of timely payments it becomes marketable, even if it does not meet Freddie/Fannie guidelines. 

Selling these "seasoned" loans frees up more money for the "portfolio" lender to make more loans.  If they are sold, they are packaged into pools and sold on the secondary market.  You will probably not even realize your loan is sold because, quite likely, you will still make your loan payments to the same lender, which has now become your "servicer."