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We will discuss and cover starting mortgage net branch for producing loan officers. Many mortgage loan officers love what they do. One of the greatest rewards of being a mortgage loan originator is that you can make the dream of homeownership a reality for home buyers. This holds true, especially for first-time homebuyers. 

Mortgage loan officers can seek employment at banks, credit unions, mortgage broker shops, and mortgage banking firms. There are so many choices of employers to choose from. Some mortgage loan originators may prefer to work for a small mom-and-pop mortgage brokerage shop where the mortgage broker shop is only licensed in one or two states.

Become an Independent Loan Officer With Starting Mortgage Net Branch

NEXA Mortgage, LLC now gives every full-time licensed loan officer an opportunity to become an independent loan officer or a branch manager with starting mortgage net branch opportunities. This guide on starting mortgage net branch will be very detailed and long. After all, we are discussing your career and future. 

Finding the Right Company For Starting Mortgage Net Branch

Others may choose to work for a small mortgage banking shop where the mortgage banker is licensed only in a few states. Yet others may want to work for a larger national mortgage banking firm where the company is licensed in most of the 50 states.

Those who chose a career as a mortgage loan officer chose this profession due to being able to help families and at the same time make a very lucrative income. This is due to the challenges in structuring a tough deal for borrowers with limited credit/income history or prior credit issues. Most loan officers are on commission. Loan officers who do not close a loan do not get paid. 

Scopes of Work of Independent Mortgage Loan Originators

A loan officer job has many scopes of work. Not only do you need to know the rules and regulations of the various mortgage loan programs, but you also need to know how to qualify borrowers. Loan officers need to know how to read credit reports. They need to know how to read tax returns. Especially if you are dealing with self-employed borrowers.

Become an Independent Loan Officers Starting Mortgage Net Branch

More importantly, one can be the most experienced loan officer in the country but if you cannot market yourself, you will not make any money and there goes your career. There are many mortgage loan originators who become successful in what they do. They are natural-born leaders who want to take their mortgage careers to the next level.

Starting Mortgage Net Branch With a National Mortgage Company Licensed In 48 States

NEXA Mortgage dba Gustan Cho Associates NMLS 1660690 is a correspondent lender with the ability to broker non-QM and specialty niche loan programs. We are licensed in 48 states. Gustan Cho Associates is looking for P and L branch managers and top-producing loan officers interested in joining our team at Gustan Cho Associates. Gustan Cho Associates has a no-lender overlay model on government and conventional loans.

Our loan officers close FHA and VA loans down to 500 FICO. 20% of our files are manual underwrites. The ability to broker gives Gustan Cho Associates the to help borrowers with non-QM loans such as no-doc home loans, bank statement loans, asset-depletion mortgages, non-QM jumbo mortgages with credit scores as low as 500 FICO, non-QM mortgages one day out of bankruptcy, traditional 90% LTV jumbo mortgages, and dozens of other specialty loan products.

P and L Mortgage Net Branch Opportunities

NEXA Mortgage dba Gustan Cho Associates NMLS 1660690 is looking for ideal partners to join our team as P and L mortgage branch managers. Guidance, stability, opportunity, technology, and full support are offered to branch managers, loan officers, and support/operations staff. Choosing the right mortgage company for your mortgage branch office is key to your success and the success of your loan officers.

You will realize that the management and operations staff at Gustan Cho Associates excels in experience, service, products, and opportunities for you and your team to succeed. We do not have layers of management and red tape to get things done. We are open-minded and realize it is the people that make a great company.

You will find out we have the utmost five-star customer service, competitive pricing, fast turnaround times, and are able to communicate with management 7 days a week. We have every mortgage loan product in today’s market. Besides banking government and conventional loans, we have lending partnerships and access to over 40 wholesale specialty mortgage lenders.

Owning Your Own Business Starting Mortgage Net Branch

Opening up a small mortgage broker shop is one option. However, the broker/owner will bear substantial costs in setting up an office especially licensing and bond fees. Producing loan officers have an opportunity to start a mortgage branch with the help of a larger established mortgage company. The corporate mortgage company will bear all costs including benefits for all of the employees of the mortgage branch.

Producing Loan Officers Have The Opportunity Starting Mortgage Net Branch

Branch managers do not worry about the cost of licensing and bonding. They can grow their business with a team of loan officers and support staff by partnering with Gustan Cho Associates. You will have the ability to bank government and conventional loans and be able to broker non-QM and specialty loans to wholesale lenders.

Branch managers need the support and backing of the parent mortgage company to be successful and grow their team. This business model is called the Mortgage Net Branch Business Model. Unlike other mortgage companies, Gustan Cho Associates offer two different types of P and L mortgage branch compensation programs. The full P and L and the net P and L compensation plan. 

Advice on Starting Mortgage Net Branch

This blog on Starting Mortgage Net Branch was written as an informational guide. The purpose of this blog is for loan officers who always wondered about starting their own mortgage shop but cannot get answers on the internet. When they ask other branch managers of mortgage branches, they do not get a straight answer. This blog is not a recruitment piece but more of a general informational guide for loan officers who may one day open up their own independent mortgage shop.

We Give You An Opportunity To Become A Branch Manager In The Mortgage Business

I get many calls and inquiries from loan officers nationwide weekly inquiring about starting a mortgage net branch. I even get calls and inquiries from loan officer candidates who did not even take or pass the NMLS national exam and who have goals of someday starting a mortgage net branch.

I respect those individuals who have goals and motivate themselves to always further their careers by having goals of someday having their own business. I will do anything in my power to help those individuals. Gustan Cho Associates is always open to partnering with the right mortgage professional in adding a mortgage branch and/or recruiting top-producing loan officers.

Starting Mortgage Net Branch With A Parent Mortgage Company

So let’s start by me adding that starting a mortgage net branch is probably the next best option you have to start your own mortgage brokerage office. This can be done without needing the big bucks and the liabilities attached. Starting a mortgage net branch is somewhat like a franchise.

Starting Mortgage Net Branch As an Independent Loan Officer or As A Team

You are opening your own independent mortgage branch of an established mortgage company with an established name and support staff. Most corporate companies that offer net branches are mortgage banking firms that are licensed in dozens of states. They already have large lines of credit and an established infrastructure.

Fastest Growing Largest Mortgage Broker With 190 Wholesale Lenders

They are ready in offering producing teams of loan officers to use their name to do business under their corporate umbrella. Gustan Cho Associates has a unique business model. We have a no-lender overlays business model and the ability to broker non-QM and specialty loan programs to wholesale lenders. We can originate and close FHA and VA loans with credit scores down to 500 FICO, manual underwriting, broker no-doc loans, bank statement loans, asset-depletion mortgages, and dozens of other specialty loans.

What Is The Process of Starting Mortgage Net Branch

A net branch is a corporate branch office of a mortgage company. The branch manager of the net branch will have a branch manager agreement with the corporate branch. The agreement will state the terms and conditions on how the net branch manager is to operate his or her net branch. The mortgage net branch system is somewhat like owning a franchise of a real estate company. For example, if you are a real estate broker and want to open a local Century 21 Office, you would contact the corporate offices of Century 21.

Comparing Starting Mortgage Net Branch to Opening Up Real Estate Franchise

The corporate offices of Century 21 will have the requirements for you to be the broker/owner of a Century 21 franchise. This would include a franchise fee, reserves, broker’s license, and resume. Most likely they would like to know not only that you would be able to afford the branch location of the new Century 21 branch office but the future success of it.

The way most real estate companies predict the future success of a new independent real estate brokerage shop is by asking for the past two or more years of commissions of the broker/owner as well as the team the broker is bringing in. This is the same way how to start a mortgage net branch and we will explain the steps on how to start a mortgage net branch in the following paragraphs.

First Step on Starting Mortgage Net Branch

If you are a loan officer and want to pursue starting a P and L mortgage net branch, you need to weigh the pros and cons of owning a mortgage net branch. As a net mortgage branch owner, it is like owning your own business. You will enter into a mortgage net branch agreement with the corporate offices of the mortgage company.

The parent mortgage company will most likely have minimum production requirements for you and the group of loan officers you are bringing on board. Most mortgage companies will require a minimum of $5 million per month in production. Loan officers who are motivated and have a goal to open their own P and L mortgage branch, we will give you the opportunity at Gustan Cho Associates.

Production Requirements To Start Mortgage Net Branch

Most mortgage companies will have minimum production requirements where they will want to see your commission runs, W2s, and tax returns of the previous two years. A typical mortgage company will require at least $5 million in monthly production. Some require less while others require more.

The parent mortgage company is taking on a risk by opening a new mortgage net branch. This is because of any violations that the mortgage net branch creates, the parent company is responsible for the consequences. Those with a history of compliance violations and regulatory problems will have a hard time getting a sponsoring mortgage company. The parent mortgage company will need to see that the risks of taking you on board are worth the rewards.

How Much Does It Cost Starting Mortgage Net Branch

One great advantage in starting a mortgage net branch is that it does not cost much money: Starting other types of franchises like a franchise insurance agency like Allstate Insurance or a Keller Williams Real Estate Brokerage Office does cost money and startup costs.

Mortgage companies are not allowed to charge a large franchise fee from branch managers of a new mortgage net branch. However, the parent mortgage company will want to see proof that the new net branch manager has the potential in doing monthly production and continue to do so. The best indicator of future monthly production is prior to production numbers. Most mortgage companies will ask for commission runs and pipeline reports from the past couple of years.

Is It Profitable Starting Mortgage Net Branch

The basic costs of starting a mortgage net branch are minimal. There are many loan officers who own one or two-man mortgage broker shops. Others can have a 50 or more-man team. Any costs incurred by the parent corporate mortgage company will be an account receivable for the mortgage branch and will be deducted from future earnings.

Many mortgage brokers are converting their broker shops to mortgage net branches. If this is the case, the cost is minimal. This is because everything is just switched over to the corporate name of the parent mortgage company. The parent mortgage company needs to renegotiate the new office lease.

All vendors need to be under the name of the parent mortgage company. The new mortgage net branch will be responsible to make all the payments for rent, utilities, payroll, and other bills. Cannot have any bills billed under your name or another business name.

Profit and Loss Business Platform on Starting Mortgage Net Branch

Most net branches are on a Profit and Loss business platform. The way this works is that you and the parent mortgage company have a comp arrangement per file closed. From that commission, the loan officer gets paid their commissions per their comp plan. Then all expenses get paid including the rent, utilities, and other office expenses.

A set amount of the gross commissions is set aside for reserves. Normally 10% of the total revenues. The branch manager can be on a salary and that salary gets deducted from the total office commissions.

How Much Does It Cost Starting Mortgage Net Branch Office

With a full P and L mortgage branch, all expenses are deducted from the monthly revenues. Employee payroll, commissions of loan officers, payroll tax, benefits, credit reporting fees, rapid rescore fees, and other costs and fees are paid from the Profit and Loss Statement. The balance of the monthly commissions left over will be swept into the branch manager’s net mortgage branch P & L.

The overages of the P & L can be distributed as a draw or withdrawn periodically. This is depending on the branch manager and the net branch/parent company mortgage net branch agreement. On a net P and L compensation mortgage branch, all expenses will be included and the branch manager will get a net gross compensation. From the compensation, the loan officer gets paid. 

Starting Mortgage Net Branch With The Right Parent Company

Once you have decided that starting a mortgage net branch is for you, choosing the right mortgage net branch is very important. In the following sections, we will cover things you need to consider starting mortgage net branch with the right parent company. Here are things that you need to consider when deciding which parent mortgage company to decide on:

• Are you a refinance shop or a purchase shop?
• If you and your loan officers do mainly refinances, you need to make sure that the rates are competitive with the parent mortgage company you choose.
• Many mortgage companies are purchase shops where they have higher rates with great comp plans but this can devastate your business if pricing is not competitive.

Overlays:

• Does the parent mortgage company have overlays and if so what are the main overlays?
• Credit Scores?
• Limits on collection balances?
• Debt to income ratio overlays?

Broker/Correspondent Relationships:

Are you able to broker out deals? Does the parent mortgage company open to having a broker wholesale relationship with specialty lenders? There are many parent mortgage lenders who only want you to push their mortgage loan products and are resistant to brokering/correspondent lending.

State Licensing And Compliance Requirements

State Licensing:

Depending on your business model, having access to certain states or many states may affect your business. Some mortgage lenders are licensed in all 50 states. Others are licensed in a handful of states. One important factor branch managers of a new mortgage net branch need to realize is that just because the corporate offices are licensed in all 50 states does not mean that you or your loan officers are eligible to be licensed in any state.

The branch needs to be licensed in the state that you or your loan officer apply for a state license. It is not just a matter of paying the branch licensing fees. But the more important issue is the amount of time it takes for a state license approval. For example, applying for a branch license in California is only $20.00. However, it takes over four-plus months to get the branch’s approval.

If you have borrowers in the state of California and just signed up with a parent company and you are relying on them to do business in California, the waiting period for a branch license approval with the state of California may be an issue. You need to plan ahead when it comes to licensing.

Types of Loan Programs Available at Parent Company

What type of business model do you and your loan officers have? Is it territorial where you are just counting on local business? Or is it nationwide consumer-direct where you get borrowers from your website and online marketing?  Many mortgage lenders have territories assigned to mortgage net branches where borrowers outside your territory are off-limits. At NEXA Mortgage LLC, you have full reign in doing business in 48 states, including Washington DC, Puerto Rico, and the U.S. Virgin Islands.

Minimum Production Requirements in Starting Mortgage Net Branch

Parent mortgage lenders will require a minimum monthly production. What are the consequences if you do not meet the minimum monthly production levels? There are companies that will cut ties with your mortgage net branch if you do not meet minimum production after a certain period of time.

Costs and Fees Starting Mortgage Net Branch

What are the costs per loan and the pricing adjustments? What type of holdback do they have? Do they take a certain percentage of your monthly production and set it aside for reserves?

Processing and Underwriting Starting Mortgage Net Branch

Need to find out what the corporate policies are with having your in-house processors and underwriters. Some companies will only want you to use corporate processors and underwriters. While other companies will allow you to choose your own mortgage processor and mortgage underwriter. What are the turnaround times for underwriting?

At NEXA Mortgage, LLC, you do not have costs for mortgage processors. It is totally up to you if you want to hire in-house mortgage processors. Most independent loan officers at NEXA Mortgage, LLC use contract mortgage processors. The processing fees is built in on the Closing Disclosure and billed to the borrowers.

Is There an Expansion Cap?

Will corporate let you expand your business where you are able to open satellite branches? If so, is there a territory you are given, or can you open branches nationwide?

Rewards of Starting Mortgage Net Branch

Starting a mortgage net branch can be extremely profitable and rewarding. However, you would want to do your due diligence and choose the right company that suits you, your business model, and where your loan officers and support staff will feel comfortable. Hope this article helps those who have questions about starting a mortgage net branch.

If you have any questions or are planning on starting your own P and L mortgage branch, please contact Wendy at Gustan Cho Associates at gcho@gustancho.com. If you already have a P and L mortgage branch with a team of loan officers and would like to explore joining Gustan Cho Associates due to its hybrid mortgage banking with the ability to broker loans, please reach out to us. We are available 7 days a week, evenings, weekends, and holidays.

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