A net branch license is basically a way for a loan originator to “piggyback” on another mortgage broker’s license.
For instance if Bob is a big broker and has the ability to pay the fees and do the educational requirements to obtain licenses in numerous states, he can offer John the ability to be a “net branch” of Bob’s mortgage company.
So now, all John has to do is become an approved loan officer with Bob’s company and John can lend in all of the states that Bob is licensed in without having to get his own license for all those states. John will still have to complete whatever is required for individual Loan Officers in those states, but he does not have to get his own broker’s license.
You may be asking yourself, “isn’t John basically just a loan officer employed by Bob?” That’s more or less the case, but the big difference here is that a Net Branch allows John to have his own office location, a different address than Bob’s. Also, in many cases John would have his own company name as a DBA of Bob’s. For instance, all his advertising could have John’s Mortgage Company on them whereas he would legally be Bob’s Big Loans DBA John’s Mortgage Company.
John gets all of the benefits of being an employee of a company with numerous licenses and lender affiliations, yet retains his right to run his own business with his own fee and rate decisions.
Net branches are controversial in terms of compliance and may not always be around. But for now, if people are following all the rules, they can greatly benefit those that take advantage of them in ethical ways. For instance, living in Portland, a net branch would give me the opportunity to do a loan for my Aunt in New Jersey without having to get a broker’s license for NJ. My Aunt would get a “family deal” on the loan and I would have more business. If net branches didn’t exist, it wouldn’t make sense for me to get a NJ Broker’s license if I was only doing one deal per year there.
It’s a numbers game. The licensor has to have enough volume to break even on all their costs. They usually charge a flat fee or a “per loan” fee.
Note that today net branches are banned from originating FHA or any government guaranteed loan.
In its Mortgagee Letter 00-15, May 1, 2000, the Office of the Assistant Secretary for Housing-Federal Housing Commissioner, communicated that “net branch” companies are prohibited from helping HUD/FHA approved mortgage companies to originate insured mortgages.
However, there are great alternatives to partner with mortgage bankers, us being one.
With no upfront fees, we look to partner with seasoned mortgage professionals:
We are licensed in 49 states, with the exception of New York and Hawaii We are a full eagle lender, which means we have direct endorsement designation, and thus we are able to offer 24hrs turn back times, and we average 28-day closing times. We have direct FNMA pricing, and a rich portfolio of products that we know meet the needs of 90% of borrowers out there. We offer Encompass, AMB accounting software tailored for the mortgage branch, and other bundled solutions to manage the branch efficiently and cheaply We have group benefits and more
If you are looking to open a mortgage branch, or want to switch lenders, consider us. You can visit our website to learn more: http://www.crosscountrybranch.com/mortgage-branch-benefits.html
Or give me a call