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Mortgage Net Branches – Everything You Need To Know

January 12th, 2021 // branchright
Mortgage Net Branches

Everything You Need To Know About Mortgage Net Branches

Mortgage Net Branches – What Are They? 

Mortgage banking companies may have branch offices for production. These are generally known as either Affiliate Branches or, more commonly, a Mortgage Net Branch. These branch offices are managed by a branch manager who oversees both the staff of that location as well as the operating expenses. Many branches have full staffing, but others are operated by a single person. 

What Are Good Choices For A Mortgage Net Branch 

There are a lot of different things you can look for in a top candidate for a mortgage net branch. For example, an existing mortgage firm may be looking for ways to expand to licensing across multiple states without incurring the major delays or expenses that often come with that. Or you could find a top producer who’s ready to stop raking in massive profits for someone else and making only a small cut off the top. And finally, you can search for a team that is already established and successful in the mortgage space but has much more space for growth in income, sales, and profits. 

Are All Mortgage Net Branch Programs The Same? 

No, mortgage net branches come in many different shapes and forms. Over 200 mortgage bankers and banks now operate mortgage net branches of some sort, and each of them has their own programs with widely varying details. For example, some mortgage net branches allow the manager of that branch to lead brokering their own loans, but others will not allow that. With some mortgage net branches, the branch receives a 100 percent commission, while others divide the commission. Many mortgage net branches only house brokers, while others include bankers in their ranks. It’s rare for a mortgage net branch to be equipped for nationwide business, since that usually requires higher fees and can lead to lower profits if not handled properly. Finding the best choice for your mortgage net branch can be very complicated. But making a bad choice can be an absolute disaster. 

What Advantages Are There To Running A Mortgage Net Branch? 

One of the major benefits of a mortgage net branch is that yield spread premiums (or YSPs) do not have to be disclosed, since it’s just a branch of a larger firm or bank. Since sub-prime loans are very rare nowadays, an increasing amount of mortgage loans will be made up of federally insured FHA mortgages or VA mortgages. However, it can be time-consuming and spendy to get the approvals required for handling those specific varieties of loans. By becoming a mortgage net branch, the branch manager can gain access to the necessary licenses immediately. Mortgage net branches can potentially even gain access to nationwide business capabilities, if they are part of a federal or nationally chartered bank. This avoids the need to track down and pay for licenses in each state individually. Mortgage net branches can also help cut down on paperwork and focus on originating first and foremost. The net branch will handle all the annoying administrative necessities, such as payroll, audits, and so on, leaving the branch manager free to spend their time originating loans. 

What Disadvantages Are There To Running A Mortgage Net Branch? 

The corporation that runs a mortgage net branch has to come up with competitive and enticing programs to offer to those branches; otherwise, managers will simply choose to broker out as many of their loans as they can get away with. At that point, the benefits of being a mortgage banker dry up, and you’ll once again be required to disclose YSPs. 

A lot of companies have entered the mortgage net branch business in recent years. The growth experiences by many of these companies can lead to a meltdown with their accounting systems, which then requires times to build back up. This is a tough milestone for companies; they’re likely to hit a certain scale where that happens as a mortgage net branch. Whether or not a branch survives that event will determine whether they stick around as a mortgage net branch going forward. There’s also a certain amount of time required to switch to mortgage net branch model. The net branches will need to hunt down state licenses, get regulatory approvals, and more, unless you’re lucky and they’re a nationally licensed bank. Plan for the time and costs necessary in each state that you want your mortgage net branch to operate in. 

How Much Does It Cost To Start A Mortgage Net Branch 

Costs range widely, but you can expect to pay a minimum of $500 and possibly into the thousands. Generally, mortgage net branch companies will hand any of the costs beyond the initial passthrough fees. If a company tries to charge you other up-front fees to start a mortgage net branch, you should be skeptical and strongly consider not dealing with them. 

The goal with a mortgage net branch is first to save you money and second to make you profit. The net branch should make money when you make money. In other words, you should not be a source of profit for them until or unless they’re a source of profit for you. 

The manager for a successful mortgage net branch should set up reserve accounts to handle regular costs – such as utilities, rent, and phone bills – within the first few weeks. 

How Do You Tell A Bad Mortgage Net Branch Opportunity From A Good One? 

The best way to determine whether or not a mortgage net branch is good or bad is to ask as many questions as you can. New or less reliable companies may make it as simple as possible to get signed up, while the best companies will be much more discerning in who they sign a deal with. However, every company should require a background check; if they don’t, that’s a bad sign. Expect companies to have a minimum experience threshold and to actually call and talk to your references; be suspicious if they do not. Also keep in mind that most companies will be working with many different branches. That means if that if another branch does something shady or unethical, that could reflect badly on you as well. 

The biggest thing to look for with any company before becoming a mortgage net branch is whether or not they will continue supporting you. They should offer up courteous, experienced, and thoughtful people as you work out your deal and figure out how to get things off the ground. If they’re not providing a level of help that feels adequate, don’t be shy about asking for more or looking for a better partner. 

What Mistakes Should You Avoid When Choosing A Mortgage Net Branch Company? 

First and foremost, be sure to select a company that has the experience and systems set up to support your branch and to help you grow. If all the company has is a flashy website, a mortgage banking license, and a budget for advertising, they’re not going to be much help when you really need it. 

Another trap to watch out for is hidden rules and restrictions. Some companies will stuff operation limits into the fine print of contracts to try to trick you into signing a deal that may not actually be ideal for you. 

You need to be careful and smart when choosing to join a mortgage net branch. With a little thoughtful work, though, this can be a very exciting way to expand your career and make money as part of the mortgage industry.