It could be something to refer to yourself as a mortgage broker. After a year of banner refi in the industry, which appears to be followed by a year of banner buying, even young originators and loan officers feel they have had a lifetime of experience. Many are considering the next step in their careers and the flexibility and independence of opening their own brokerage has its appeal, especially as the broker channel is growing steadily to gain more market share. Even so, it is a big decision, and being alone as a broker should be a source of serious self-reflection.
“You have to wonder if you want to be independent and how long you’ve been in business,” said Kimber White (pictured), president of the National Association of Mortgage Brokers (NAMB). “I think if you are younger and maybe only have two or three years of experience, being a broker may not be what you want right now. You may want to work under a company or brokerage deal to prepare for independence as there are many professionals out there. “
With the freedom to work with almost anyone Wholesale lenders, negotiate the best price for your client and find solutions for almost any type of borrower. Brokers have many advantages in the mortgage area. At the same time, becoming a broker requires serious groundwork in the form of licensing requirements and compliance with government regulations. From there, regular maintenance is required where new product sets are learned from dozens of different lenders rather than working with a single suite of proprietary products.
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White stated that to be successful, brokers must be able to market themselves and operate as self starters. It’s one thing to get a large volume of refis and leads generated by your company’s marketing department and another to build a broad community network and the ability to generate leads yourself.
“I would never advise becoming a broker,” said Kirk Tatom, president of Tatom Lending in Dallas, TX. “I’ve done it both ways and I would never doubt being a broker. The main reason to be a broker would be the availability of multiple sources of capital and the main reason would be that your liability is significantly less than in the banking channel. “
Tatom said the auditors are far smoother and easier to use than brokers in the audits he does every two years. Banks and lenders have a far greater liability burden as they manage the actual flow of capital – the broker acts as an independent sales rep and therefore has nowhere near as high a liability risk. He said that very rarely does he have to tell a borrower that there is nothing he can do for them because of so many choices of products and lenders. His answer is almost always “yes”.
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White found that independent brokers are also somewhat less subject to business cycles. Sure, you may have to tighten your belt during slow periods, but running an independent broker will not get you laid off on a downward cycle like an originator might during a cold period. The flexibility of lenders also means that a broker can control various market shocks and cycles to capture business in products that a retail originator may not have access to.
When the creators attempt to become brokers, White insisted that he and his colleagues at NAMB have their backs. A program called NAMB University will soon be launched, which will provide blueprints for new brokers to start and grow their business. Many of these resources are already available on the NAMB website.
White stressed that originators should consider becoming brokers if their primary goal is to gain better control over their careers. This may come with new risks and new challenges, but it has been very rewarding for brokers like Kirk Tatom.
“The broker channel is without a doubt the best way to talk about liability, product availability and how can I help as many people as possible? “To go,” said Tatom. “If there was anything better, I would.”