The banking branch — A profitable alternativeDavid Waldenmortgage banking branches, managing your own business, benefits of relationship with bank
There are many benefits to becoming a mortgage banking branch.
This profitable alternative offers the opportunity to manage your
own business, while providing the support and backing of a large
financial institution and federally chartered depository bank.
Support such as closing, marketing, human resources/payroll,
technology management and flexibility allows branches to be as
large or as small as the operator desires, which suits a wide
variety of needs.
Since the Federal Deposit and Insurance Corporation regulates
federally chartered depositary banks, a branch affiliate of a
federally chartered bank gains the advantage of a sound and
compliant work environment. With ever-changing state and federal
regulations, mortgage professionals require a depth of
understanding regarding the importance of compliance issues and a
willingness to adhere to standards relating to state predatory
lending laws, disclosure of yield spread premiums and HOEPA.
Non-compliance with just a single regulation can severely hurt or
hinder a mortgage entity. Many firms, however, do not have the
ability to provide ongoing training, compliance monitoring or even
quality control to keep them on the right track. A business
relationship forged between the branch and its parent company
invokes strength and stability, and therefore eliminates the
overwhelming stresses a mortgage entity might experience if faced
with having to keep up with regulations in an ever-changing
environment. Now, originators who previously acted solely as
brokers can quickly become mortgage bankers, with many of the
benefits and services, but without the considerable hassles.
Having a bank as the parent company provides a branch affiliate
with the stability, security, expertise and financial pull that
enable a branch to offer the greatest possible selection of
mortgage products. Since federally chartered banks are exempt from
state licensures, mortgage banking branch affiliates have
multi-state lending capabilities. Among the key benefits of
branching is greater business potential for originators, lower risk
in the marketplace, greater resources, brand recognition, increased
efficiency, improved flexibility and technology. The integration of
bank technology with branch affiliates provides a higher degree of
automation, increases operational efficiencies and can improve
market position in relation to the consumer, by being able to offer
a broad range of financial services.
Obtaining warehouse lines, gaining U.S. Department of Housing and Urban
Development approvals and acquiring secondary marketing
expertise are among the broad array of services instantly available
to the branch affiliate. Not worrying about net worth requirements
necessary to sign up with large investors and a complete benefits
package are among the additional benefits.
In order to maintain, let alone increase profitability and
market share, banks must provide multi-channel delivery within the
branch, as well as implement network strategies that expand their
geographic footprint. This multi-channel delivery system includes
functionality for all areas of the branch, which shares in the gain
of secondary marketing to offer better pricing. Loans that are
closed through the bank's private money or warehouse line are
considered a secondary marketing transaction where one can take
advantage of the non-disclosed yield spread premium.
Working for a bank is not for everyone, however. The challenges
in creating the ideal branch affiliate environment are substantial,
and there have been bumps in the road over the years. When you deal
with independently-minded professionals, you might experience some
problems with standards and conformity, both of which are required
for a branch affiliate system to function properly.
Those who seek employment with a chartered bank must be aware
that they will have to work in a more structured environment, and
follow all of the banks policies and procedures. These policies and
procedures tend to be much more regulated and stringent than those
of a privately owned mortgage firm.
If you are seasoned mortgage professional in the market for a
branch, why not consider a banking branch? It could be a profitable
alternative.
David Walden is assistant to the director of mortgage
banking for Colorado Federal
Savings Bank. He may be reached at
[email protected].
