Why Community Banks Need a Second Correspondent Lender

The case for a backup correspondent lending relationship

Most credit unions and banks aren’t starting from zero when it comes to correspondent lending. You’ve already done the work – vetted a partner, completed the paperwork, built the workflow. Your team knows how it works.

Over the past few years, the correspondent lending landscape has shifted. Partners that seemed stable have stepped back, and the institutions that depended on them have had to scramble to find a new approved partner, complete onboarding, and rebuild a workflow while trying not to lose momentum with their borrowers.

What is correspondent lending?

In correspondent lending, a bank or credit union originates, underwrites, and closes mortgage loans, then sells them to a larger lender. It is not the same as wholesale lending or mortgage brokering, where the institution does not close the loan in its own name.

For most institutions, the real question is whether one relationship is enough. A strategic mindset calls for strategic partnerships and right now, there are good reasons to add another one.

And if recent news in the correspondent lending space has you thinking about your backup plan, that’s probably a healthy instinct.

Why One Correspondent Relationship Isn’t Always Enough

Choosing a mortgage outsourcing partner ultimately comes down to trust. And trust, in this business, is built over time — through market cycles, regulatory shifts, and the moments when things don’t go according to plan.

That’s something worth thinking about when you consider how many correspondent lenders have left the market in recent years. Not all partners are built to last. When one steps away, the institutions that depended on them have to scramble — finding a new approved partner, completing onboarding, and rebuilding a workflow, all while trying not to lose loan momentum with their borrowers.

A second relationship is the straightforward answer to that problem.

You need a backup. If your primary partner has a service disruption, pulls back from a product, or exits the market, a pre-approved second relationship means you’re never one announcement away from telling a member or customer you can’t help them.

Some deals fit one partner better than another. Loan programs, guidelines, and niche products vary. A second relationship gives your team more tools to work with — and more ways to get deals done that might otherwise fall through.

Longevity isn’t a small thing. Gershman has been in the mortgage business since 1955, making us the oldest mortgage lender in the St. Louis region. We’ve worked alongside community banks and credit unions through changing markets, evolving regulations, and shifting volumes. Many of those relationships have lasted decades. When you add a correspondent partner, you want to know they’ll still be there in five years — not just this quarter.

This kind of partnership can last a long time. The institutions we work with don’t treat us like a vendor. We collaborate closely, stay responsive, and build workflows that fit how your team operates. That’s not something you rebuild from scratch every few years, and it’s not something every partner can offer.

What Getting Started Actually Looks Like

One of the most common things we hear from new partners is that they expected it to be more complicated.

There are no loan minimums and no minimum loan amounts. You don’t have to commit to a volume threshold or sign your institution into something hard to walk back. Once the paperwork is submitted, the process is straightforward.

We also offer onboarding training however works best for your team — full group sessions or one-on-one walkthroughs. If your mortgage team is small, we work with that. If you’re onboarding a larger group, we work with that too.

More than 70 years of working with financial institutions has taught us how to make the first loan as smooth as the tenth.

What Should You Look for Before Adding a Correspondent Partner?

Not all correspondent lenders are the same. If your leadership team is evaluating whether to add a relationship, start with these five questions:

Is this partner stable and experienced — and do they have a track record of staying in the market through difficult cycles?

1. What loan programs do they offer, and do those programs fit your borrowers?
2. Do they underwrite in-house?
3. What are their average turn times, and how do they communicate on pipeline
4. What happens if a loan doesn’t close — what do you owe, and what recourse do you have?

At Gershman, we underwrite in-house, staff experienced teams committed to clear communication, and offer a full lineup of loan programs – FHA, VA, USDA, conventional, first-time homebuyer loans, and Jumbo loans. We’re happy to walk through any of these questions with you directly.

For a deeper look at how correspondent lending can work for your institution, read our earlier post: Mortgage Growth Without the Overhead.

Ready to See How We Work?

Adding Gershman as a correspondent partner doesn’t require a big commitment upfront. No minimums, no pressure, just a conversation about whether we’re a good fit for your institution and your borrowers.

We’ve spent more than 70 years building the kind of partnership that holds steady when the market doesn’t. If you’re evaluating your options or just want a dependable second relationship in place before you need one, we’d welcome the conversation. Email Patrick Fox at pfox@gershman.com or connect with our team to start the conversation. Call 1-800-457-2357 or click here today.

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About Gershman Mortgage
At Gershman Mortgage, communities, families, and homes are at the heart of what we do. Built on the core values of honesty, integrity, entrepreneurial spirit, and customer-first service, we’re committed to providing an exceptional homebuying experience. Our goal is simple: to exceed expectations and build lifelong relationships.

NMLS #138063 16253 Swingley Ridge Road Suite 200 Chesterfield, MO 63017 (800) 457-2357 Equal Housing Lender. Serving borrowers in: Alabama, Arkansas, Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Wisconsin