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Brokers! Don?t Jump Ship!

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  • Tweets that mention ?Loan Brokers are one of the l | | 03 Jun 2010, 07:52 PM Agree 0
    [...] This post was mentioned on Twitter by JWean, Jeff Chalmers. Jeff Chalmers said: ?Loan Brokers are one of the least expensive ways to bring a mortgage to market?, said Mr. David Stevens FHA Commissioner http://bit.ly/bjinvg [...]
  • Andy Harris | | 04 Jun 2010, 09:49 AM Agree 0
    Amen! I thought I was the only one screaming this over the last few years...
  • nathan | | 04 Jun 2010, 03:57 PM Agree 0
    It's been nice to see a thinning of the herd. It's allowed professional brokers like myself to shine in a market dominated by banks.

    <a href="http://progressionrealestate.com/useful-links/sacramento-refinance/" rel="nofollow">Sacramento Refinance</A>
  • Chad Wade | | 05 Jun 2010, 06:50 AM Agree 0
    Amen...great article! It's nice to finally see someone pointing out the pitfalls and potential problems with turning over your brokerage license and falling under the umbrella of a net branch or retail outfit. These may seem like good opportunities but the reality is they are only short term fixes to a problem that really isn't as bad as what the nay-sayers would have everyone believe. I feel very confident there will be a lot of disappointed ex-brokers down the road that regret their decision to leave this channel.
  • Noel Cookman | | 15 Jun 2010, 05:59 AM Agree 0
    I heard for 10 years as a broker about the next great lender that was broker-friendly and would offer good pricing and great service. In the end, they are no different from banks - they are a bank! They are as self-serving as any net-branch relationship. To be fair to Paramount, I never did business with them. I am tempted to reactivate my brokers license and try. But, if they have good pricing and great service, they will grow quickly, experience those growth pains and the service will suffer. I have NEVER encountered a lender whose managers and AE's could wrap their brains around the dynamic of the relationship between originator and applicant/borrower - especially those who claimed that "they came from a retail or broker shop" or that "they understand what it's like..."

    If I can get Paramount Wholesale to answer the phone, I'll be able to make a fresh judgment for myself. Pardon my cynicism. But, the fact that they have wholesale AND retail should give one a sense of their priorities.

    As a philosophical point, I do not have a problem with individuals or companies operating in their own interests. It's short-sighted however to operate ONLY in one's own interest, not to mention the morality of the arrangement. Then again, I don't expect a company to apply the "Golden Rule" or ask themselves "What Would Jesus Do?"
  • John H | | 17 Jun 2010, 11:57 AM Agree 0
    This is a short-sighted and biased opinion in many respects. It stereotypes net branches just as the Obama administration has stereotyped brokers as the cause of the economic crisis. I am a branch recruiter for a small broker-banker in Southern CA.

    Well-established, niche-successful, or high-volume brokers that are still closing respectable or sufficient volumes aren't "scared" into surrendering their licenses and businesses to become net branches today. Every broker is sick-to-death of incompetent and slow-as-molasses wholesalers who need 45 days and 400 conditions overcome to close a vanilla file. They're tired of having to keep track of different ways of complying with GFE/RESPA depending on who the wholesaler is. And they're extremely concerned (and rightly so) that the Merkley/Klobuchar ammendment to the Wall St Reform Bill ALREADY PASSED by both the House and Senate could severely impact, limit, or eliminate YSP, which is no small matter. As Noel points out above, wholesalers today can be (or become) retail competition at a moment's notice, so be careful when you hear a wholesaler offering a "commitment" to broker business. They already have an exit strategy available to them if wholesale doesn't work out. As a broker, where does that leave you when they depart the market?

    That's not to say that the net branch model is a panacea. It's not for everyone, but in today's times it can be the difference for many smaller, less-profitable brokers who are faced with working from their homes to eek out a living versus retaining and even growing their business by being competitive.

    Many net branches offer marketing support, lead sharing, medical/dental insurance, back-office support, and other perks that NO wholesaler provides. The difference in cost to broker or bank a mortgage isn't the big deal Mr. Lucido makes it out to be either -- it's generally a few hundred dollars -- and that's absorbed by YSP from one lender's option to another chosen by the broker on a per-deal basis. If your net profit on a mortgage is less than the difference it would cost you to broker or bank it within a net branch it wasn't profitable to begin with.

    This begs the question though -- what ARE brokers getting from wholesalers for being such "valued" clients today? Is your favorite wholesaler providing you with anything to help you GROW your business, like leads or marketing materials? Do you get volume-based pricing incentives as a small guy? We all know the answers to these questions, and that's another reason many brokers have opted for the net branch model. There's no denying that there's strength in numbers.

    As for our branch program, we offer something to a very select few brokers in specific market areas in CA that other net branches do not -- 24-48 hour underwriting, 10-day docs, 3-week closings on bank'd mortgages. You won't see that advertised anywhere with any other branch. We have the means and capability to ramp our in-house underwriting up or down as necessary so we're profitable but never at the expense of closing conventional mortgages fast. Our principal and many of our LOs are "top 200" originators in the U.S. -- from 2006 to today.

    We remain a broker as well, though today 80% of our originations are closed with our banking lines due to sheer speed and efficiency. Our rates are competitive, but 250+ Realtors in Southern CA trust us to close on a level no one else can, and that's the model our business is built on and we pass on to our select branch partners.

    It is and remains our belief based on 15 years in the industry that a broker will GROW their business in today's market when he/she can close quickly, efficiently, and with minimal underwriting hassles. When your Realtor partners are happy, you're happy. When your borrowers are happy, you're happy. With happiness comes referrals and more happy and satisfied clients. Brokers have CONTROL over the process with a reputable net branch, versus no control whatsoever with a traditional wholesaler.

    The mortgage industry as a whole is still in flux. Wholesale lenders will continue to remain an important role regardless of the net branch model. There's no "shame", however, in transitioning from broker to banker in today's climate if it means the difference between being successful or failing, and many top-producing LOs and brokers would agree that while it's not perfect, it's allowed them to achieve new levels of success in tough times.
  • Tim | | 30 Jun 2010, 08:38 PM Agree 0
    John H,

    I am so glad you have so much time to write and inform us of the great model you offer. I see the name of your company no where.
  • John H | | 06 Jul 2010, 08:09 AM Agree 0
    Sorry (for the omission, not for the time I chose to author the above. And, uh, Tim-- using voice dictation software enabled me to write that in 15 minutes -- you can google Dragon Naturally Speaking for the link buddy).

    Augusta Financial -- Newhall, CA.
    (661) 255-9824.

    Remember -- we're NOT seeking branches outside of select markets in CA.
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