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Special Reports
Broker or Banker: Is a Step
Up Right for You?
'Banking Is for Brokers Looking for More'
By Jennifer Harmon
MODESTO, CA -- For brokers who want to be affiliated with a larger company and
be able to offer more products and services to customers, converting to mortgage banker status is the right decision,
according to Diana Grossman, executive vice president of MortgageTree Lending.
The company is preparing to launch a new correspondent program this month that
will convert brokers to bankers with the MTL engine behind them. "Becoming a mortgage banker allows the professional
more control over the internal process, instead of brokering out to different sources," Ms. Grossman said.
The MTL program helps brokers concentrate on what they do best - originate loans - while MTL deals with all of
the secondary market responsibilities that come with the transition process to mortgage banker. It trains the customer's
staff on the MTL system and provides them with the tools they need to underwrite and draw documents.
MortgageTree Lending has been watching where the trend in business is heading
and listening to their customers. Ms. Grossman has spent months focused on the issue, talking with brokers so that
MTL could develop a program that is attractive to the industry. Near the final stages of development, she discussed
the pros and cons of taking the mortgage professional "to the next level."
"The biggest obstacle mortgage brokers face is loss of control. And the cost
of training is sometimes so high, they can't do it," she said. "We watched where business is going, took
those components and developed our net branch program. When we did that, the net branch manager took it to the
next level, one that allows the loan originator who has his own shop, or is working for another mortgage banker,
to take the next step and manage his own office."
As part of its agreement with a broker, MTL takes care of the client's accounting
and most of the marketing automatically. Training in new technology is provided at no additional cost.
MTL has kept a low profile during recent months on the announcement of the new
program. "For us, it's about quality over quantity. We want to make sure to invite the right people into the
company. It doesn't work for everyone," she said. The broker must close 50 units per month or more. The MTL
program is set up to enhance systems already in place, not start-up situations. The broker must be well established
and verify references.
"Our goal is to add four per year. We wanted it to be attainable. In no way
are we going out there and doing across-the-board wholesale business," Ms. Grossman said.
Mortgage brokers face certain dilemmas when it comes to going out on their own.
There is a different mentality, she said. Some customers want to operate as a banker but want the benefit of being
able to have 35 or 40 different rate sheets to look at. As a banker, you narrow down the number of investors you
sell to, which can lead to a difficult period of adjustment. Also, mortgage bankers pay W-2 earnings while brokers
are paid 1099 wages. Attaining the necessary state approval and securing warehouse lines in order to operate are
some of the steps a mortgage broker must face to obtain banker status. This can be difficult without some assistance,
according to Ms. Grossman. "Our feeling was if you bring them in, assist them in the process and systems,
chunk it down, and set a timeline, it's much more realistic. We say, 'Here's where we can get to. These are the
issues you are going to deal with along the way,'" she said.
In order to convert from broker to mortgage banker status, the individual must
be willing to invest at least 12 months to get there, Ms. Grossman said. It takes a great deal of time to set up
net worth requirements and deal with how the internal staff handles functions that the broker's current lender
is doing right now. Ms. Grossman also added that it's important to make sure all originators who work for a broker
are on board with the idea to change to banker status. "It's important to know the loan originators want all
of the same things they will be able to deliver as a banker. If they don't find those things of value, they will
leave."
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