Archive for the ‘lenders’ tag
Gmac Wholesale Mortgage Lending
How to promote your career as a Loan Officer in Mortgage Industry
Every week I receive countless emails from loan officers dissatisfied with their small Commission checks are looking for something better within the industry. They have learned the mortgage business inside and out, and made the necessary sacrifices to put their career on static. Not satisfied with the measly yield spreads and basis points of their current company pays, they look at other options and a way out.
You may remember In a previous article I mentioned that:
"When I started in the industry, my commission spread was 20% of the yield spread premium or YSP. And if it was not bad enough, we've worked on teams of three people, two loan officers and a processor. This meant that any commissions I and my team earned would be divided up in three ways among us all. I'm not kidding! My commission after all was said and done, was a puny 6.5 to 7.0% of the YSP. So on a $ 3,000 loan, I'd make about $ 200 at most. You do not want to see what it looked like after they took taxes out. Absolutely pathetic. Being ignorant (in the mortgage industry) does not make me stupid. "- END QUOTE.
If you are currently working as a loan officer, and want to know your career options, here are a few to consider:
Option 1: Become a full-fledged mortgage broker and open your own mortgage company.
This is really the only way you will get 100% commission and be able to dictate the lives of your own terms. There are a few obstacles you must overcome, as well as disadvantages. One of the biggest obstacles is that many states require a certain level of capital be held in reserve before you can even get a license.
Many states have personal net worth requirements and will not even allow you to do something under your own license until you meet the standards they have set. Of course there are experience requirements and a mandatory background checks are part of the process as well.
You will also need to not just sell the loans, but process them, market your business and handle all the back office paperwork and legal requirements. Not to mention, your choice of lenders you use will be extremely limited because the lenders themselves have their own set of criteria before they will even approve you for business. Mortgage Brokering solely on your own under your own license sounds great at first glance, but only if you have personal and financial fortitude to weather the inevitable hiccups.
Option 2: Get your own mortgage banker and finance your own deals.
This does not really apply to you unless you first a mortgage broker trading under your own license. Many brokers are big enough to where they make the transition from broker to lender. The reasons are obvious. The warehouse credit lines if they are secured from the right source can provide a bank with an even higher yield spreads than if they simply stuck to being a broker and going out other lender rate sheets. In this instance, as a banker you make your own "rate sheet" and set your own commission spread levels. Some Mortgage Bankers even engage in wholesale lending and have other brokers feed loans in them.
Financing of credit may come from a variety of sources such as warehouse lines outside investors, etc. And the state and federal regulatory rules and regulations vary. One of the biggest benefits of mortgage is that you can set your own lending criteria and can approve loans that others consider too risky.
One of the best known examples of a mortgage broker switched to a mortgage lender is Ditech Funding. (I'm sure you've seen their commercials with the loan officer character!). I was told that their wholesale prices come from GMAC and Ditech was their biggest customer. It could be you some day!
Mortgage is certainly something to consider if you already own your mortgage broker with your own license.
Option 3: Let your business and join a net branch as your own branch manager.
To become a net branch is probably the best of both worlds. You're on your own under your own mortgage branch, but retains a great deal of control over day-to-day operations of the business. Interior handles all the backend stuff like accounting, legal and regulatory requirements. They also have established relationships with national lenders, many numbering in the hundreds. They can set you up quickly and provides a structure and support to help you succeed.
The commission that spreads from the network of branches varies widely, and most companies require a minimum past experience of at least two to five years shows a track record of success. Some companies have a set interest rate differential divided by 70% to you and 30% to them. Others give you 90% or even 100%, but charge a flat fee per file, which is between $ 300 to as high as $ 600 a loan. Although 100% sounds great, I've heard stories of even higher fees fixed file fees out there!
If the net effect branch does not have a fixed split per loan, they can mark-up their rate sheets they give you and take the additional spread. For example, a lender sends to network branch a daily rate sheet, net branch home office marks it a tad, and send it out to you. And you never see what the "correct" prices are! You are pricing out an already marked up rate sheet and never even realize it! Sneaky, eh?! Not all companies do this, but some do!
Also, with net branches even if you are on your own, you still have to follow their set of policies and procedures file. And the company will have other unknown requirements and various corporate rules. But you will not find this out until you are well underway and engaged in them.
It's funny, many mortgage companies are really net branches in disguise. Maybe even the business you work for now! That's right! They probably was once a little one-person net branch at a time too! But they grew up, expanded and hired people to work for them. You can make this! It is a distinct possibility.
Overall, net branches is a great way to "own your own business" without all the headaches and hassle to go along with it. But a word of caution: research each company thoroughly before you join and do not rush decisions.
Some of the largest net branches out there are: Allied Capital Corporation, Carteret Mortgage, Allfund Mortgage, Global Mortgages, Summit Mortgage, etc. (There are literally hundreds of choices, these are just a few!)
Option 4: Stay as a loan officer.
To become a broker, bank or branch network manager does not appeal to you, you can always stay as a loan officer and change companies. If you do not want the responsibility of running your own shop, why not just move into greener pastures.
There Many mortgage companies – even in your own town – probably pay much more than you get at this time. Why not have a little look around and see what the other guys pays? It does not hurt to ask. Remember that a loan officer is really to be a salesman. And working on commission, meaning that most companies will hire you with a little hesitation (assuming you have the educational and professional background). It is only a small risk for them if we fail, because if you do not sell, you will not paid.
Do not be afraid to look elsewhere, because if you live where you are, you will never get ahead.
Option 5: Move to another area the mortgage industry.
As you know, I work in education and help loan officers and mortgage brokers succeed in the industry. I've been there and done it already. After selling and closing thousands of loans, I know what works and what does not. When I got burned out from the home full time, I decided to use my knowledge and experience to to help educate others.
This way, I am still a part of the mortgage industry I love, and have all the freedom and control over my life I want. You can do the same. This industry is in dire need of professional trainers. Like many people I've talked to, I'm sure your training was not very More than a cool phone and a couple of bum leads. Mortgage education is a great area to consider.
And if not mortgage training, why not become an appraiser, title company owner, real estate attorney, loan processor, notary public, underwriter, wholesale account representative, etc. These are all great careers and are still in the mortgage area.
Ultimately, when you go in the mortgage business is entirely up to you. The sky is the limit and your opportunities are endless. I've only just opened your eyes for a few of them.
About the Author
Rob Lawrence is ranked one of top national trainers in the mortgage industry. He is the currently the CEO of Battlecall.com, coaching, tools and resources to turn mortgage professionals into mortgage warriors. Visit http://www.battlecall.com for his free “Sink Or Swim” weekly newsletter, mortgage training, marketing advice and more! Jumpstart your career in the mortgage business, starting today.