Note: The content below about Mortgage Branches (Mortgage Net Branches) is under review and still being developed.
What is a Mortgage Branch (Mortgage Net Branch)?
A Mortgage Net Branch, or Mortgage Branch – also known as an Affiliate Branch – is a corporate production branch office of a mortgage banking organization. The branch manager operates the branch office with oversight and a large amount of responsibility for both the operating expenses and the staff supervision. Some branch offices are one-person operations while others are fully staffed, production offices employing dozens of professionals.
Who is a good candidate for an Mortgage Net Branch?
There are three good candidates. A strong candidate is a top-producing originator who is weary of bringing in huge profits for another firm only to take his/her 35-75% on payday. Another ideal candidate is the team that already works together successfully in a bank or mortgage company office and wants to stay together but have more potential for sales, profits and business income. And also ideal is an existing mortgage broker firm (or net branch office) that wants to obtain multi-state and FHA/VA licensing without the burdensome expense and delays involved in doing so for itself.
Arenít all Mortgage Net Branch programs the same?
No. There are several different banks and mortgage bankers in this business at some level and each program varies widely. Some will permit a branch manager to broker his/her own loans anywhere they want; some wonít. Some pay 100% commission; some split. Some are banker/brokers while many are only brokers. Very few equip and enable their branches to do business nationwide without extra fees, licenses, and/or reduced profits and requirements to put loans through an ďin-houseĒ branch. Making a wise choice can be tricky. Making a bad one can be disastrous.
What are the advantages of this arrangement?
Since the mortgage net branch manager is operating a branch of a bank or mortgage-banking firm, one of the chief benefits is that the yield-spread premiums are not required to be disclosed. FHA & VA mortgages will account for a growing percentage of mortgage loan volume as sub-prime products have largely disappeared. Approval to do those types of loans is expensive, difficult and time-consuming to obtain. With a mortgage net branch the branch manager has those licenses on day one. If your mortgage net branch is a nationally or federally-chartered bank (very few are) then you have the additional and powerful advantage of being able to do business nationwide, with almost immediate start-up capability without having to wait for expensive licenses in individual states. The last big reason is that most mortgage net branch managers would prefer to concentrate on originating (and usually hate paperwork). A good mortgage net branch company will not only execute mundane items, like payroll and accounting but will also handle compliance and regulatory obligations (audits, etc.) as much as possible, thus freeing the branch manager to do what they do best... originate mortgage loans!
What are the disadvantages of a Mortgage Net Branch?
If the mortgage net branch corporate entity doesnít offer competitive programs to its branches, managers will end up brokering (if theyíre allowed to) out most of their loans. This defeats the purpose of becoming a mortgage banker and re-instates the requirement to disclose yield spread premiums.
There are a number of new companies in this business. Accounting systems typically hit a meltdown and rebuild stage at a certain level of growth. If a company hasnít been in the business more than a few years, or hasnít grown beyond a certain scale/size, itís virtually certain they havenít yet reached and survived this event. Many branch offices die when this happens, as it invariably will. Another consideration is the transition time necessary to make the switch. Most mortgage net branch companies (excluding banks which are exempt from state licensing requirements) will not apply for your state license until you have ďsigned on the dotted lineĒ and then the clock begins on waiting for a state regulatory agency to receive, review, investigate and (hopefully) approve your license. Then, the process (and fees) has to be repeated for each state in which you wish to operate.
What will it cost me to start up?
MBS has relationships with many of the top rated and soundly run Branching Mortgage Banks in the country. These branches have asked us to assist them in identifying highly qualified branches and have provided us with the profiles for those desired branches. When you call us, we can quickly identify which of those companies you may be a fit for. We will ask you to provide some basic information about the company, management and your production. We then get to work on identifying which one or two companies will be the best fit for you and will proceed with introductions to those mortgage banks.
The best part of all is that this is a service that we provide to you for FREE.
How can I tell a good Mortgage Net Branch program from a bad one?
Thatís the $1,000,000 question. As we have mentiones, not all mortgage net branch opportunities and companies are created equally. It is true that trying to sort through all of the different types of companies and their offerings is a daunting task. You must determine which one is the best fit for your company and future goals. By the time you have landed on this page, you likely have learned that each company that is looking to attract branches is offering options ranging from Mortgage Net Branch to some version of a retail branch. How do you plan to figure this out and see through the flashy marketing materials to the true picture of each company? The answer is easy. We have already done it for you!
What are the two biggest mistakes people make in selecting a Mortgage Branch (Mortgage Net Branch) company?
The biggest mistake is choosing a company that isnít experienced enough and doesnít have adequate systems in place (accounting, support staff, etc.) to accommodate growth. Many of them only have a mortgage bankerís license and an advertising budget (which is often just a website).
The second mistake is finding out too late about restrictive operational limits that were never disclosed (except maybe in the fine print of a 40 page employment agreement) and that would have made a big difference in the final decision (see the next question for more)...
Becoming a part of a branch networking system can be a rewarding and a very profitable way to succeed in the mortgage industry today. Proceed with caution, but by all means proceed!
Contact the MBS team today to discuss the many Net Branch opportunities available today. For more information on your Mortgage Branch (Mortgage Net Branch) options, contact us now.
Still looking for more information on making the switch from mortgage broker to mortgage banker? View some of our resources:
Mortgage Broker to Mortgage Banker resource # 1
Simple information from MBS on mortgage branches (mortgage net branches). We can help you find the best Mortgage Branch (Mortgage Net Branch) solution for your company.
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