Small mortgage brokers turn to the hypothecary net branch as an alternative business model to succeed in the highly competitive home loan industry. The net branch in the mortgage industry simply means a branch partnership or affiliate that gives players more independence and less of the constraints faced by bigger, licensed mortgage brokerages. Do you want to learn more? Visit mortgage branches.
Going into the net branch has many and varied advantages, starting with the ability to maximize the use of scarce capital. The smaller brokerages typically don’t have enough resources, energy, or cash flow to help them during tough times. Hiring underwriters, funders and closers, compliance officers and secondary market experts takes lots of money, energy and staying power. But all of these requirements do away with the net branch route.
They provide the turn-key solution for smaller brokerages which level the playing field between them and the big institutions. Loan partners or brokers joining net branching will start as an individual while at the same time obtaining the resources of the broader mortgage fund, without the regulatory pressure.
Another distinct advantage is the mandatory exemption from regional regulation that is necessary for large mortgage brokers. Through affiliating with the larger institutions, an efficient mortgage net division works on a multi-state license with a wider coverage area. Therefore, the independent branch is spared the cost and effort of securing state licenses which take months and hundreds of thousands of dollars.
Taking on this also generates 100 percent fees, while many seasoned lending partners in brokerages, banks and credit unions receive just 35 to 75 percent of their originating yields. A number of high quality branch partnerships offer 100 percent of both the origination fees and the spread premiums for yields. The disparity in sales can therefore be drastic in volume-wise.