If you’re a mortgage broker looking to grow and take more control of your business, the phrase ‘non-delegated mini-correspondent lending’ might have crossed your radar. If it sounds like a mouthful, don’t worry — here’s a break down of what it means and why so many brokers choose this path.
At its core, non-delegated lending allows brokers to gain more control over the loan process by acting as a correspondent lender rather than a broker. The “non-delegated” part means that while you’re still responsible for originating loans and managing client relationships, the underwriting process is handled by the lender.
Here’s why this setup is appealing. You can fund loans under your own name, which can boost your credibility with clients and referral partners. By taking on a bit more responsibility, you’re rewarded with higher revenue potential compared to traditional broker models. Since the underwriting decision remains with the lender, you’re not carrying the same level of risk as a fully delegated correspondent.
Earnings potential
There’s a reason why so many brokers take this plunge. Brokers can potentially earn more money with many reporting significant revenue growth their first year of doing this type of lending.
“Funding loans under your own name strengthens your brand and creates a sense of trust and stability for clients.”
Funding loans under your own name strengthens your brand and creates a sense of trust and stability for clients. It’s a way to step out from under the umbrella of larger lenders and establish your brokerage as a key player in the market.
The increased revenue potential is one of the biggest draws. By handling more of the loan process, you’re able to keep a larger share of the profits — a game-changer for growth-oriented brokerages. Because underwriting remains the lender’s responsibility, you’re able to enjoy the benefits of being a correspondent lender without the significant risks of full delegation.
Compliance concerns
Switching to non-delegated correspondent lending isn’t a decision to take lightly. Many brokers cite compliance challenges as a major concern. The Consumer Financial Protection Bureau’s focus on compliance means a solid framework is non-negotiable for non-delegate correspondent lenders.
Having a solid compliance framework is critical. You’ll need to meet specific licensing requirements, which vary by state. This often includes setting up your business as a mortgage banker. As a non-delegated correspondent lender, compliance requirements are more extensive than as a broker.
Your business will need to adapt to the additional responsibilities of loan funding and closing. This can mean hiring more staff or upgrading your technology. But transitioning to non-delegated correspondent lending doesn’t need to be overwhelming.
There are companies that specialize in helping brokers navigate this path with confidence. From licensing and compliance to operational setup, these companies can make the process smooth and stress-free.
If this sounds like the next logical step for your brokerage, you don’t have to navigate it alone. Work with outside partners to help take your brokerage to the next level — together.
