One of the biggest trends in the mortgage business these days is the branch partnership. An increasing number of companies are offering these opportunities, but questions remain. Can just anyone open a branch partnership and be successful? Who is the right person for the job? Here are some guidelines to consider:
In general, an individual should have at least three to five years of experience as a loan originator to be considered a strong candidate for a branch partnership. Two to three years of origination experience is also acceptable, however, someone with less than two years in the business should wait until they have acquired more seasoning.
An individual loan processor or underwriter is not a good candidate to take on a branch partnership, since sales experience is necessary. However, they can be an ideal candidate to team up with an originator to run an office.
Some mortgage companies require a branch partner to have a minimum personal or business net worth of $50,000 to $100,000. This is not always the case. For example, my company does not have a net worth requirement.
The best candidate for a branch partnership is the owner of a mortgage brokerage that has been in business for two or more years and has greater than $4 million in total closed monthly volume. This broker already has an established referral base, knowledge of investor guidelines and a proven record of managing an operation. The business is already operating and the transition should be very smooth. If the former owner can adjust to being part of a larger company, the relationship could prove to be a win-win proposition.
The next best candidate for branch partnership is the owner of a smaller mortgage brokerageone with less than $4 million in total closed monthly volume. The experience running an operation is very valuable and with the additional support from corporate headquarters, this broker can grow quickly. The branch partnership can be a major plus when obtaining licenses in other states. Production will increase thanks to the ability to bank and not disclose the yield spread premiums. This makes the life of a small mortgage broker that much easier.
Experience managing your own operation is not a prerequisite for becoming a branch partner. A top-producing loan officer with greater than $5 million in total closed monthly volume can also be a strong candidate. However, this individual needs to have a realistic view of the business they're entering. Many such officers believe that going into business on their own would enable them to close more loans and make more money. This isn't always the case. In fact, top-producing loan officers generally close less in their first year as a branch manager than in their previous year. With all their time spent running the office, they don't have the time to close all of their business. The loan officer needs to be closing $5 million or more per month in case he or she slips a little in the first few months. This is not to say that a top-producing loan officer isn't the best person for the job. Actually, with a great referral base, the loan officer is probably one of the best candidates for a branch partnership.
The Team Approach
If you do not fall into one of these categories, don't give up hope. Two or more producing loan officers can form a formidable team. This is a great way to make a move and start a branch partnership. With more than one loan officer bringing in business right away, it takes pressure off the team, so they can manage the office more effectively. In fact, this combination has the potential to out-produce all others.
The Interview Process
A candidate for a branch partnership should view the process as a job interview. The parent mortgage company is seeking an individual to become a manager of their firm. The process will begin with background checks. In the second stage, the company will check the candidate's references with attorneys and members of the investor community. Finally, there will be an in-person interview. If all goes smoothly, the applicant can expect the process to take 30 to 90 days, depending on the individual company.
While a lucrative opportunity, branch partnership is not for everyone. If you have been in the industry for less than two years and are only closing one or two loans per month, consider working with a more experienced partner until you have built a strong foundation of your own. In addition, branch partnership requires strong organizational skills and the ability to multi-task, for example, placing loans while still managing all back office responsibilities. If you do not possess this skill set and are new to the business, you are not a viable candidate for branch partnership. In short: look before you leap.
With the right experience, a solid referral base, knowledge of investor guidelines, managerial skills, a strong work ethic, integrity and a great training program, branch partnership can truly be the best road to success in the fast-growing mortgage business.