Less DIY, More ‘Done For You’

With too many steps in too little time, aspiring mortgage brokers can streamline a broker shop setup that’s turnkey, reliable, and ready

Less DIY, More ‘Done For You’
Staff Writer

Using the skills and knowledge he had gained in his career so far, Hudson spent the next year developing a business plan on his own. “I’ve been a student of the business for 26 years,” he said. “I’ve been in all facets of the mortgage industry, from origination to capital markets to marketing, to regulatory and government affairs. I helped our previous company get our Fannie ticket and our Freddie ticket. I’ve written policies and procedures.”

But not everyone has two decades of industry experience to help guide them in starting their own brokerage, nor do they want to wait as long. That’s why Hudson recommends aspiring broker owners to seek guidance from a compliance shop.

“There’s Brokers Compliance Group, there’s Strategic Compliance Group. There are lots of resources out there,” he said. “Because first and foremost, without a doubt, you need to make sure that you have policies and procedures. You need to be able to rely on your vendors, your LOS partners, your point of sale partners, and your CRM partners.”

Advice Up For Grabs

The steps to opening a brokerage aren’t as simple as “reheat for 2 minutes” or “add a dash of parsley,” and not everyone has decades of observing and analyzing broker practices like Hudson does.

Lauren Gustafson, Director Of Business Development at Strategic Compliance Partners (SCP), says playing the build-a-brokerage game involves several steps, like NMLS licensing, company insurance, arranging wholesale partners, setting up compliance, and finding a credit reporting company or loan origination software (LOS) that aligns with the business. Those, of course, are just a fraction of what’s needed. SCP, in this case, is a one-stop-shop for aspiring brokerage owners.

Lauren Gustafson, director of business Development, Strategic Compliance Partners

“We are a company that is [providing] ongoing compliance for the mortgage broker. So that means we can assist through the licensing process and after the fact,” Gustafson explained. “So our main programs are called Compliance Essentials and Compliance Premium. They’re giving you all of your federal and state-required policies.”

Gustafson says that SCP blends responsibility with accountability, meaning that they maintain a broker’s compliance yearly and provide a hands-on consultant who can keep a broker updated, but it’s ultimately up to the broker to comply. Their programs provide all the federal and state-required policies, managed through a centralized portal that ensures regular updates, so a broker isn’t caught off guard if a new policy is due.

“It’s still the broker’s responsibility to implement what we’re providing them, right? So that’s where I don’t want to say we get off scot-free, but the broker is starting their own business, so there’s still responsibility as a business owner in that.”

Gustafson added, “We’re a third-party compliance consultant that [they] hired, so we’re not necessarily working straight for that broker  … there’s a very fine line between legal and compliance … it’s still up to the broker to listen. If [they’re] going to pay your employee W2 versus 1099, we can tell them one way of how not to get in trouble, but they can still go and do something else.” Some brokers adhere strictly to SCP guidance, while others choose to forge their own path. Broker owners may sometimes prefer the latter approach, but SCP is adept at accommodating diverse needs.

One Size Doesn’t Fit All

Gustafson says a client can choose one of two directions when using SCP: compliance essentials, which offers policy provision and ongoing updates, or compliance premium, which includes the compliance essentials’ features plus additional services such as filing mortgage call reports, handling company renewals, and updating NMLS information. Gustafson added that the company also provides resources like broker guides, webinars, and direct consultant support to assist brokers in preparing for audits and maintaining compliance.

For licensing, SCP has a dedicated team that helps brokers navigate the NMLS process.

> Howard Kaplan, EVP of business development, Avenu/IntroLend

“We actually have a whole separate licensing team. We don’t outsource any of our consultants. They’re all 100 % SCP employees, and what they do is solely focus on the NMLS process,” Gustafson explained, noting that their pricing structure for licensing varies based on membership status and state requirements. (Non-member licensing is a one-time fee, while membership provides ongoing support and discounts.)

“We try to be a one-stop shop for the broker,” Gustafson said. “The only thing we don’t do is set up their company structure, LLC, or register them with the Secretary of State.”

Different Strokes For Different Folks

For those dreaming of a seamless start in the mortgage brokerage world without spending a dime, United Wholesale Mortgage (UWM) offers a program called “BeAMortgageBroker.com,” which was launched back in 2019 to help retail loan officers and aspiring brokers dive into the wholesale mortgage industry.

“So they will do … I like to say basically from start to finish, helping someone with their vision, who they want to be, and then helping them with their licensing,” said UWM’s Chief Growth Officer, Desmond P. Smith. “And then once they’re set up, we will help them if they want to help recruit loan officers with their branding, [or] with their marketing. It’s a full-service team that will help anyone convert from retail to the mortgage broker side.”

Smith says UWM started tracking how many brokers were helped only four years ago. Since then, Smith claims UWM has helped more than 3,000 new mortgage brokerages come to fruition.

That number is only growing, and it’s not just aspiring independent brokers looking to take the leap. “[The broker channel] has been [growing] I’d say, probably well over maybe two years now. A lot of folks are coming from retail,” Smith said. “ A lot of people, to be honest with you, don’t want to open their own shop, they just want to work for a mortgage broker. So we will help give them options.”

As for those looking to embark on a new business journey, UWM offers training called “Success Track.” Smith says loan officers, whether they’ve been in the business for 10 years or are someone starting their own company, can use Success Track training for free. But, if a broker aligns as a UWM partner, they have separate perks.

John Hudson, CEO and co-founder, H&M Mortgage Group

“We have things like partner perks because you are a UWM signed-up broker. It will help you with things like bonding and getting insurance,” Smith explained.

Taking Formation

For soon-to-be brokers who don’t want to immediately choose whether to align with a big lender, IntroLend, an Avenu Technologies company, is a comprehensive suite of technology and back office platform services intended to create and support mortgage brokerages. Howard Kaplan, EVP of Business Development for Avenu/IntroLend, says that IntroLend is by no means a joint venture or collaborative effort. “We have two basic categories of customers. One is existing mortgage brokerages, people starting to want to open their brokerage, and two is real estate companies that want to own a mortgage company as well,” Kaplan explained. “We don’t write loans, we don’t buy loans, we don’t sell loans, we don’t lend money. We are a service provider, a software and services provider. We run a full formation process. If somebody says [they] want to start a mortgage brokerage we have everything for them: all the NMLS checklist items, getting their ownership structure set up, forming their entity. We provide operating agreements … a full software stack, and provide a concierge department.”

Kaplan and Thomas Ciarrocchi, IntroLend’s vice president of lending production, both say that IntroLend is a “just add water” approach. “Our mantra in what we can provide holistically is if you’re starting a mortgage brokerage, all you have to do is sell consumers, convince referral partners to send you business, and recruit other loan officers to manage all the business that you’re bringing in,” Kaplan added.

IntroLend’s services and perks — including a business portal, a loan origination system, a consumer site, a concierge team, and a back office work — come with tiered costs. “The fully integrated solution [is] just $438.50 per loan,” Kaplan notes, pointing out that this includes a minimum of 10 loans per month after four months and a $7,500 setup fee.

While IntroLend does offer an à la carte option, Kaplan suggests it’s not the best deal.

“We have a very powerful tech stack as a standalone. When we get into the a la carte services, it’s varied, and it depends on which one of those services you want us to do,” he said. “The bottom line is, if you were to buy everything on an a la carte basis, it’s going to get you back to pretty much around that $438.50 figure.”

This article was originally published in the NMP Magazine October 2024 issue.
About the author
Staff Writer
Sarah Wolak is a staff writer at NMP.
Published on
Oct 04, 2024
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