Our most recent post about the future of mortgage brokers struck a nerve with many readers.
As we stated in earlier post, mortgage brokers need to adjust, adapt and find ways to ensure they can effectively compete and thrive. If they don’t, they may become like the blacksmiths in the early 1900s when cars became the primary source of transportation.
Regional mortgage bankers (RMB) with a retail and wholesale orientation may be the best partners for mortgage brokers. We won’t call it what it really is, but the P&L branch concept is a viable way for mortgage brokers to be bolted onto a mortgage bank and still maintain the entrepreneurial spirit and flexibility of a broker. We see many of our regional wholesaler clients converting some of their broker customers to branches.
Why would a broker convert to branch with an RMB?
- Most RMBs are loan officer centric. Owners were probably originators before becoming operators and have a sensitivity to the fundamental needs of loan officers. Price, service and common sense decisions are drivers in many of these shops. They view the internal mortgage bank as another wholesaler requiring them to compete and earn the business from loan officers.
- Most RMBs still allow loan officers to broker loans to wholesalers. While they generally ding your pricing, this gives originators the flexibility needed to save a deal in the event their in-house guidelines or turn times do not permit the loan to fund internally.
- Most of our RMBs clients provide a high level of support to the branch partners and loan officers. This includes HR, accounting, compliance, marketing, technology and training.
All of these are appealing to many mortgage originators.
Regional mortgage bankers are looking for experienced mortgage originators who write high quality loans. These mortgage brokers must fit into the conducive, competitive and flexible environment to be successful. From my vantage point, it sure looks like a collaborative win win for both parties. Two of our most successful clients have developed a strategy to collaborate with high quality top producing originators who operated as mortgage brokers in the past.