As published in Scotsman Guide's Residential Edition, November 2005.
Making the transition from mortgage broker to mortgage banker has its advantages. You can originate more loans because you will be selling loans on the secondary market. You have more control over your closings and can close loans in your own name, which extends your brand.
Becoming a banker, however, also involves a business-model shift. This requires thorough research and preparation to execute successfully. A large consideration, and the first decision you will make, is whether to establish a warehouse line of credit with a warehouse bank or a correspondent lender. Indeed, warehouse bankers and correspondents aren't created equal, and your profitability and the service and support you receive can vary greatly depending on whom you choose as your partner.
For a smooth transition, there are a number of things to consider when choosing a warehouse banking partner or correspondent, from the warehouse line of credit to marketing support.
As a mortgage broker, your goal is to get every deal funded. If a loan goes bad, you are not penalized (short of fraud), so the objective is to keep production levels at a steady volume.
Mortgage bankers also want to get deals funded. Unlike brokers, they also have to consider the repurchase risk and contingent liability if the deal goes sour. This has a strong impact on if they choose to fund a loan; they don't want one to come back to bite them.
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