Net Branch Substitutes: Mortgage Brokers Can Easily Do Business In Other States
Mortgage brokers traditionally have specialized in doing business locally. The reasons for this are simple: most home loans were generated confront-to-confront. In more recent times, large mortgage companies had used the telephone and the internet as a way to expand beyond their localities and compete on a national level. While many of these companies have found great success, the smaller mortgage companies have been forced to compete with competition from foreign states.
Net branches arose as a solution to this problem. A net branch allows a mortgage specialized to essentially open a franchised office of a larger company. This larger company usually lends nationally, or at the very least lends in multiple states. Licensing requirements vary from state to state, generally costs from several hundred to several thousands of dollars, and often has educational requirements that must be met before the license is issued. By joining a net branch, the small broker is able to compete more effectively on a national level.
The problem with net branches is that they often require the broker to surrender his/her license and assume a completely new identity. This might be fine for someone just starting in the industry, but the veteran broker who has spent years developing his company’s brand usually is not willing to change to another brand so easily. Fortunately there are now mortgage net branch opportunities that do not require complete submission to the new format. The reason: they are not truly mortgage net branches, but rather, net branch substitutes.
Most of these companies are nationally chartered edges or trust companies that function almost as a co-broker. The broker uses their own license and clarify for their domiciled state, but uses the mortgage net branch different when going beyond their own state’s borders. The broker usually has access to many states and a multitude of lenders while allowing a different company to manager all of the licensing requirements.
Generally, the clients of these out-of-state mortgage brokers do not seem to mind if the brokers aren’t local. Their dominant concern comes down to the basics: they want the best rates at the lowest costs. The brokers themselves can further develop these long distance relationships by using follow-up marketing such as postcards, mortgage newsletters, gift baskets, and holiday cards.