During the last several years, lenders and loan originators have been looking for new ways to survive and thrive in the “post-lending crisis” meltdown. In many cases, this involves forming partnerships or other affiliations that seem to match their long-term goals. Of course, one of the most obvious options is the branch affiliation, whereby an individual loan officer or an independent mortgage company becomes a branch of a mortgage banker/lender or other entity. There are some definite pluses to such an arrangement, but making a move like this requires extensive research before you can make such a major move.
Starting a branch
Your first step is to identify your own strengths and weaknesses to determine if you are well-suited to be part of a branch operation. Formulate a short- and long-term business plan that will include a listing of the state(s) in which you can, and intend, to do business in.
Of course, you want to know which branch affiliate organizations are most closely aligned with your plan and overall business style. There are hundreds of potential firms, and this will require a great deal of research on your part, so begin the fact-finding mission many weeks prior to your target date. If you are uncertain about the firms that offer branch opportunities, you can consult industry publication directories or do a simple Google search. Of course, you may find that your peers and other business contacts can provide the best suggestions.
You will have many questions to ask. For example, some companies have more of a regional or local footprint, while others may have less saturation in one area, but have a broader national footprint that will allow you to take advantage of name brand recognition in nearly any state in which you intend to do business. Less saturation in a specific market may provide a more exclusive opportunity for you to become a primary player in that company’s network.
You also must consider the investment that these companies make in their people and their partners. Do the organization’s key players spend one-on-one time helping branch managers to shape their business plans? Are they willing to help you truly grow and become more profitable over time, or are you simply just another branch with access to the basic benefits of your typical affiliate company. For example, our CEO spends time working one-on-one with branch managers via weekly Skype meetings, helping them to continue to refine their business practices and sales strategies. We have been able to measure a level of success as a result of these weekly meetings.
You want to be sure not to overlook the intangible benefits such as culture, energy and spirit.
Some people tend to thrive in a high-energy, fast-paced environment. They find that hard work and constant growth can become very exciting and provide momentum moving forward. If the culture is right, positive energy will become contagious. These types of organizations tend to have the most longevity and ability to adapt to change, which is more important than ever in today’s business climate.
As part of your research, you will want to read all of the available material on the company’s Web site, in trade publications and elsewhere. Also, take time to talk with the organization’s key leaders and ask for references of a few of the company’s branch managers who ideally will share their experiences with the organization.
Partnering with larger companies
You should consider the benefits of partnering with a larger company. In addition to assuming most of the significant administrative and regulatory responsibilities, most of these organizations will provide the necessary support for human resources, compliance, licensing, in-house underwriting, marketing, closing, processing, technology, accounting and payroll. They can also offer expertise to help you grow and improve your sales and operations teams.
The main disadvantage of joining a larger affiliate-based organization is that you would likely relinquish some degree of control and autonomy. This change can be difficult for long-time business owners. However, a smart businessperson should be able to realize the long-term upside of such an arrangement. Just be sure you select the right company.
Office structure
As part of your evaluation, determine if you need a brick and mortar office or if working from home is preferable. Some companies allow individuals to work from home as virtual loan officers, and will form branch relationships with even marginal producers in an effort to increase volume through the sheer number of branches. However, others realize that the effort involved in navigating the licensing and compliance requirements, and the resources necessary to manage such an arrangement, are too extensive when compared to the benefits of offering a home office model. It may not make financial sense for a larger organization to take that on.
We have found that identifying special partners and helping each branch to develop considerably is a much more effective way to grow a company’s volume versus having an abundance of one person shops.
As an individual loan originator seeking a virtual branch opportunity, it’s easy to see the attraction of having the ability to work from home. Before going in that direction, consider the advantages of joining a branch that is already established. There are definite benefits of being in an office where you are surrounded by your peers every day. An office environment provides advantages such as camaraderie, healthy competition and the ability to stay informed. While technology can provide advantages that allow you to work remotely, it really cannot compare to working side-by-side with your processor and other teammates, which tends to provide positive energy, inspiration, sales solutions, and more effective pipeline management.
Branding is key
Once you find the ideal branch affiliation, keep in mind the importance of maintaining constant and compliant marketing messages. It would be in your best interest to take full advantage of all regional and national branding your company has done prior to your arrival. This would include press releases, flyers, mailers, e-mail campaigns, Web sites and other marketing. Capitalize on your company’s brand name, but maintain continuity by using the new company’s marketing messages, while adding your own “twist” to best support your target markets.
Most top tier branch affiliate organizations will have predetermined compliance guidelines to help steer you in the right direction. Some also may have pre-designed marketing materials and Web sites that you can use as templates. Given the current regulatory environment, we cannot stress enough the need to always lean on your corporate compliance department to ensure that all marketing messages are compliant.
Legal/restrictions
As you can imagine, one of the most critical areas to assess is the legal/regulatory restrictions on branch operations. It is important to stay abreast of changing regulatory guidelines from federal, state and local agencies to ensure compliance with lending guidelines and practices. In addition to the U.S. Department of Housing & Urban Development (HUD), the Consumer Financial Protection Bureau (CFPB) has been tasked with monitoring and enforcing most federal lending regulations. Conferring with this and other regulators is critical to your ongoing operations. Again, further evidence of why joining a larger organization with a strong, qualified compliance department makes sense.
Becoming a branch of a successful organization could be a great move for your short- and long-term future. However, it is no easy task and in order to make the right decision, you need to take the time to thoroughly research your options.
This article was co-authored by Tina Jablonski.
Tina Jablonski is vice president of business development with Gold Star Mortgage. She may be reached by phone at (866) 278-7214 or e-mail
[email protected]. Shawn Sirko is vice president of business development with Gold Star Mortgage. He may be reached by phone at (866) 249-2190 or e-mail
[email protected].
