Lender/Net Branching RelationsHarold Bariannet branch, Multiple Lenders, FHA, VA
The advantages of a net branch office are touted in every
advertisement put out by the recruiting company: multi-state
licensing, FHA and VA financing, high payouts, etc. One of the
major benefits is the ability to do business with hundreds of
lenders. A smaller mortgage company would have an extremely
difficult time establishing and maintaining relationships with more
than a handful of wholesale lenders. Many lenders have stopped
taking on new broker relationships in the current booming
marketplace. The only way a smaller broker can get their business
is through an affiliation with a larger company that has an
established relationship with a specific lender. This parent
company provides the staff, expertise and financial clout that
allows the branch office network to offer the greatest possible
selection of mortgage products.
There are numerous benefits to working with multiple lenders.
Each lender offers an individual product menu, distinct
underwriting, geographic coverage and other unique possibilities.
If you have access to more investors, then you will have the
ability to process a greater variety of loans and place them all
with that particular lender whose offerings can accommodate them.
Being able to shop around to place a difficult loan is truly
advantageous to a branch office. Additional closings equal extra
income, and the small-time broker would be able to compete with the
The ability to talk with the lenders representative or
underwriter, and breed familiarity their nuances, can lead to
lenders placing a higher level of confidence in your business.
These are the relationships that the branch manager brings with
them when they join a net branch company.
Access to Programs
The lenders' programs must be accessible. Providing the branch
offices with a list of phone numbers is not enough. One solution is
to provide a Web site where anyone at the branch office can search
the lender matrix by a number of criteria, including products,
credit scores and state coverage. Once the right lenders is
identified, then they can call them and proceed directly over the
Lenders also benefit from dealing with net branches. Each lender
has their own method for establishing and maintaining relationships
with branch operations. The initial approval process is usually
handled by the home office and frequently requires the submission
of sufficient information, so that the lender can provide service
to the individual branch office. Here is a list of some of the
different lender procedures:
++The relationship is with the home office, and the lender's
representative services all of the branch offices.
++The lender provides separate identification numbers to each
branch and individual representatives for service.
++The lender treats each branch as a separate entity, all of
whom must obtain lender approval.
The lender controls the relationship with the broker, who has no
input into the procedure. No one particular method is used more
exclusively than any other.
Control and Compliance
There are issues of control and compliance that exist just below
the surface of the lender/net branch relationship. What happens
when a branch office is in violation of a lender's rules? How can
the parent company control an individual branch thousands of miles
away? The parent company is ultimately responsible for the acts of
its brokers and branches.
When dealing with infractions, the lender can terminate the
selling agreement with the parent company, ending the relationship
with the branches. The other approach is to terminate the
relationship with the individual branch office, prohibiting them
from submitting loans to the lender. Compliance is a major concern,
and it is incumbent upon both the lender and the company to always
ensure that it is of utmost concern.
When it comes to salesmanship and marketing, the personal
relationship is extremely important. Having access to 300 lenders
is great, but possessing the ability to talk with half a dozen
lenders that can help work out a deal is imperative. For the
lender, it is a matter of quality over quantity; dealing with 20
successful branches is preferred to having access to brokers in 200
offices. The ultimate goal for both the lender and the broker is to
benefit from the relationship, and while not impossible, both
parties need to put in the effort to make it work.