I have been consulting with mortgage brokers probably longer than any other consultant when it comes to transitioning a company into mortgage banking, and over the years, I have seen some of the mistakes brokers make in thinking that being a full-service lender will fix their problems. The number one problem I have observed is that mortgage brokers think that they can delegate everything to an existing work force and they can just incorporate the new duties into their already overloaded schedules. That does not work!
At the very least, one needs to hire an experienced and competent funder who is experienced in drawing loan documents and handling a warehouse line (preferably more than one) and who is familiar with the latest software specially designed for loan tracking. That one addition to existing overhead should not be someone who is drawn from the processing pool and cross-trained on how to fund a loan. That totally defeats the need for confidentiality in your new situation. The broker/owner must be willing to learn and understand the changes that are about to take place in his shop in order to be successful in his transition to mortgage banking.
The other point of weakness that can defeat a situation is not having enough loan production to make it profitable to transition to mortgage banker status. That is a very key point because a good many mortgage brokers think that they can upgrade their existing broker approvals to correspondent approvals and make all kinds of additional money. That does not work either!
The selection of the appropriate loan correspondent relationships is critical to success. A mortgage broker needs to be completely candid about his loan production levels and match his existing situation to a lender than can really be of benefit to him. You dont have to have mega millions in loan production to successfully transition to lender status, but you do have to be willing to consider entry-level options.
Growing the business with all of the benefits that mortgage banking has to offer is no different than when you started out as a mortgage broker. A little at a time, you can gain more knowledge of the requirements and changes that need to be made, while at the same time increasing your profitability. Gaining ground in increments is always the better plan.
Elaine Roccio is a mortgage banking consultant with more than 20 years of mortgage industry experience and is founder of Broker to Banker Consulting Services Inc. She can be reached at (800) 509-5989, e-mail [email protected] or visit www.brokertobankerconsultingsvc.com.