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Branching 101
Mortgage brokers, face it - your way of life is virtually obsolete.
You are under attack from multiple fronts - your local, state and federal government, big banks, and even the media.
Mortgage banking is the business model that will give you the best chance of survival.
Branching with a mortgage bank is the easiest, quickest, most cost-efficient and least risky avenue to becoming a mortgage banker today. Virtually overnight, you can stop worrying about YSP legislation, forget about broker licensing requirements, and even make more money!
But with hundreds of net branch companies to choose from, the hype is confusing and the choices are overwhelming. Let our recruiters share our knowledge, and present you with the information you need to help you make the right choice.
You are under attack from multiple fronts - your local, state and federal government, big banks, and even the media.
Mortgage banking is the business model that will give you the best chance of survival.
Branching with a mortgage bank is the easiest, quickest, most cost-efficient and least risky avenue to becoming a mortgage banker today. Virtually overnight, you can stop worrying about YSP legislation, forget about broker licensing requirements, and even make more money!
But with hundreds of net branch companies to choose from, the hype is confusing and the choices are overwhelming. Let our recruiters share our knowledge, and present you with the information you need to help you make the right choice.
Direct Lender
Instantly become a mortgage banker and underwrite, close and fund your loans in-house. Avoid having to disclose YSP, and gain greater crediblity with real estate agents, builders and clients with your direct-lender status. All this without going through the tedious process of obtaining audited financials, bonding, E&O insurance, warehouse lines, correspondent investor approval, and the hiring, training and supervision of an underwriting, closing, and post-closing department.
Increased Revenue
Mortgage bankers earn additional YSP and SRP per loan, compared to a mortgage broker. Even after considering the fees that are paid to the corporate office, you will still normally earn increased revenue per loan.
Multi-State Licensing
It would take you thousands of dollars and months of your time to set up with licensing in multiple states. By joining a mortgage bank branch company, you can instantly become eligible to lend in as many as 48 states.
FHA / VA / USDA
Government lending has become today's subprime. Without access to these programs, you are losing a significant amount of business, in addition to increased SRP. Mortgage bank branch companies are Full Eagle HUD approved, with experienced staff to train and guide you through all facets of FHA / VA lending.
Reverse Mortgage Lending
Most mortgage bank branch companies offer reverse mortgage lending and training. This is currently the fastest growing mortgage product!
Managed Back Office
Your time is better spent managing your Loan Officers and personal production, not having to spend time on back office functions. Offload your payroll, accounting, and Human Resource functions to the corporate office, freeing you up to spend time making money.
Established Training Programs
Take advantage of established programs to train your originators and learn new products.
Compliance / Regulatory Support
It can be a full time job to keep up with federal and state compliance and regulatory requirements. Mortgage bank branch companies have the resources to handle this increasingly critical function. In addition, you no longer have to worry about time consuming state audits.
Group Benefits
With strength in numbers, mortgage bank branch companies can offer a Fortune 500 class benefits package including major medical, dental, vision, life insurance, and 401k retirement plans to you and your staff.
Marketing
Take advantage of a professional marketing department to help you produce and manage TV, print and and direct-mail campaigns, as well as discounted telemarketing services.
Do you have an in-house banking program?
It is critical to have an in-house banking platform up and running right now. It appears imminent that yield spread legislation will pass on the federal level, thus making the mortgage broker obsolete. It will take months to set up warehouse lines, hire and train an underwriting, closing, and post-closing staff, establish correspondent relationships, and learn the guidelines and procedures of each investor. In addition, do you want to be the guinea pig for this newly formed banking unit, dealing with new underwriters, untested procedures, and lack of familiarity with investor guidelines?
Tell me about your funding capacity
Warehouse lines are the bottleneck for non-depositoy mortgage bankers today. They should have multiple warehouse lines in place, and have a low utilization percentage in order to bring on new branches and handle temporary volume increases due to favorable interest rates.
Who are your correspondent investors?
The branch company should be set up with multiple correspondent lenders. As the saying goes, you should never put all your eggs in one (or two) baskets!
How do you make money?
Mortgage bank branch companies can make money in much the same way a mortgage broker can make money originating a loan -
- up front per-loan or fixed monthly fees
- back end fees by charging a margin or offering a padded rate sheet
- keeping the Service Release Premium (SRP)
- junk fees for accounting, payroll. technology, networking, compliance, imaging, etc.
Remember that nobody works for free. A mortgage banker advertising 100% commission and 100% YSP with absolutely no fees has to be making money somewhere - in this case by keeping all the SRP.
Do you have Right of First Refusal?
Branch companies maintaining the Right of First Refusal require all loans to be submitted through their in-house banking program first, thus restricting your flexibility and independence.
What are your FHA Compare Ratios?
Compare Ratios compare a company's FHA delinquencies against the general population, and are expressed in percentages. A company with a 100 compare ratio has average delinquencies, while a company with a 200 compare ratio has delinquencies that average 2x the norm. Companies with higher compare ratios are at greater risk of being terminated by HUD.
May I have a list of your active branches?
The best way to verify the facts and to assess the branch company's performance is to talk to a couple of active branches. However, you should not rely on a select list of branches supplied by corporate that they know will give positive reviews.