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   ARTICLE   |   From Scotsman Guide Residential Edition   |   December 2011

Ready to Make a Switch?

Mortgage brokers considering the jump to banking have many advantages

To remain a broker or join a banker? That question is on the minds of many mortgage brokers today. Mortgage originators have been bombarded with changes not only to loan programs and guidelines but also to compensation.

Brokers can move to another industry or start another venture — or they can decide to adapt their business. A growing trend is for mortgage brokers to join mortgage-banking operations as employees and run their branches as profit centers of the bank.
If you are considering such a move, there are six primary advantages to this path:

  1. When you become a branch of a mortgage bank, you are selling off a rate sheet. This often allows flexibility when it comes to how much credit you give clients toward their costs. Brokered loans have preset margins that you must earn, and even if you wanted to, you usually cannot legitimately credit the client as much as you would like. This may render the loan unfeasible for the client, or you may lose the client to a competitor with a lower margin.
  2. The good-faith-estimate disclosure is cleaner and less confusing to the client. You disclose only what the client is being charged and do not have to show a charge and then show a credit. It is a much easier sell.
  3. Your process becomes simplified. You don’t have to worry about multiple lenders’ submission requirements. A simplified process translates to better customer service and the ability to close loans faster and more accurately.
  4. With the right mortgage bank, you become part of an organization with resources to ensure you remain in compliance with loan-officer-licensing laws and changes in programs and regulations. Many mortgage banks provide accounting and human-resources support beyond what you might currently have. Many brokers’ resistance to convert employees to W-2 status has proven costly, and if it hasn’t invoked an audit yet, it is a risky way to do business. The payroll services that mortgage banks provide helps ensure you do things properly.
  5. You become part of a larger entity with resources to help your business, from marketing programs to technology and legal sources to help you create profitable business arrangements.
  6. Many mortgage banks offer the ability to broker loans to fill gaps that their banking products may have but that your clients need. This can be extremely important for brokers whose clients are accustomed to having a wide array of products.

How do you decide if going from broker to banker is right for you? Ask yourself these questions: 

  • What are my business’s most-important needs?
  • Do I have the resources to compete and stay in compliance?
  • Do I want to spend more time growing my business and less time worrying about administering it?

If you decide to become a banker, the next step is choosing the right mortgage bank. Here are a few things to consider:

  • Is the management team one I see myself working with daily?
  • How are their rates on the key products I sell?
  • What is the breadth of product offering?
  • What is their level of accounting, compliance, human-resources, payroll and marketing support?
  • What is the financial structure?

The decision to go from broker to banker should not be taken lightly or ignored. The industry will keep changing, and we have to keep up. It is not without hard work, but it has great rewards. 


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