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National Mortgage Professional
Oct 09, 2005

Branching.... It's a jungle out thereCarol A. NapoliMortgage branching So many companies are branching, today! There are national, regional and statewide mortgage firms offering all types of branch programs. It has become a real jungle out there in respect to figuring out who offers what and for what price. There are many categories to consider after you make the decision to join a branch company. Before we examine them, make sure you have given consideration to the motives of your decision. Your reasons for the change, in conjunction with what the branching company offers, are the only things that matter. Now let's try to weed through it all. There are many reasons why you might look to a branching company: better pricing, multi-state lending authority, government loan originations, predatory lending, non-disclosure of yield spread premiums, compliance updates, training, back-room support or an enhanced benefits program. If you own an existing mortgage entity, you also need to compare what you are losing with what you are gaining. Joining forces with a branch affiliate company usually requires you to relinquish your current company, while giving up some of your autonomy and a share of your commissions. Doing your homework on potential branch companies is the most valuable thing you can do. Like any other business, the branch company needs to maintain its profitability, while providing services that will meet your needs. Some of the basics to observe should include: How quickly was your call returned? Was the person on the other end of the phone knowledgeable? Do they have a package for you to fill out? Did they ask you questions on your business model or just explain their own? Do they do a due diligence check on all of their branches? What are their long-term business plans? It is in your best interest to be part of a company that has a due diligence check on incoming branches. It is a good thing to know that all of your fellow branches are in good standing, thereby preventing the risk of paying the price for another branch's potential wrongdoing. Some branch companies are looking to expand their closed loan volume and sell their company. This can be an advantage or it might leave you "branchless." Let's break these branching companies down into two categoriesbanking companies and brokerage companies. Banking Firms Will you be working off an internal rate sheet, and if so, are the prices and fees comparable to what is offered in your marketplace? Is there enough room to pay your loan officers and staff? Some larger firms offer very competitive rate sheets and make their profit in the secondary market while others provide you with the "real" pricing and take a percentage and/or flat rate per loan. Brokerage Firms Is the compensation model based on percentages, fees, basis points, a flat rate or a combination of all? Does the company have "preferred lenders," and if so, will they pass the volume pricing along to you in the branch? There are other areas of consideration, as well: the right of first refusal, out-of-state lending policies, corporate and branch Web sites, corporate e-mail addresses, the type of loan origination software you need to work with and marketing materials. While this might sound trivial, these are all important tools that can bring you to the next level and help you succeed. Are these tools included in the branch program, and if not, what is the cost associated with each of these services? Now you can contrast the cost and value of branching. When it's all weighed out, does the scale appear to be level? Plug your numbers into their models and see if they make sense. Are you trading in an Explorer for a Land Rover, an Explorer for another Explorer with more options, or will you be driving a Honda CRV? It might feel like a jungle out there, but with the proper questions and due diligence, you will be able to make an educated decision. And remember, always follow your gut! Carol A. Napoli is the owner and founder of BranchCare Consultants LLC. She can be reached at (856) 778-9164 or e-mail [email protected]
Published
Oct 09, 2005
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