In the past the ability to be both a broker and a lender was a valid option. Today although most companies still promote the available option to be broker or lender - in today's reality that is not an option that is really available to you.
Why?
Because of a little rule that HUD has in place for FHA loans.
The HUD rule says your company has to either broker 100% or lend 100% on FHA loans. You company cannot "cherry pick" by allowing you to close some FHA loans as a lender and allow you to broker the loans they do not like.
Since the majority of loans closing are now FHA - the HUD rule is pretty much the rule of the day.
So with this in mind - which is better for a net branch opportunity - Broker or lender?
Here are the pluses and minuses.
Lender: Pluses
- Close in your company name
- No disclosure of YSP
- Status of telling client you area lender
- Ability to work with in-house underwriters
Lender: Minuses
- Greater risk to company
- Must usually go through company underwriter not end investors
- Experienced FHA underwriters are very hard to find and keep
- Company warehouse limits can restrict or stop funding at end of month
- Limited investor options
Broker: Pluses
- Can use many different investors
- Work directly with investor
- direct wholesale pricing
Broker: Minuses
- Must disclose YSP
- Some states restrict mortgage broker fees
- Junk fees from investors can be a little higher
- Wholesale investors are exiting the business
As you can see there is not a clear cut winner in this comparison.
You have to do your homework. You have to ask a lot of questions before you make a decision.
As a mortgage net branch manager your decision should be a careful one.
If you are talking to a company that does not want to take the time to discuss this important issue it should be an indicator that you have not found the right company to work with.
I try to present information about net branch opportunities in an impartial way. The main objective of this section of the site is to give facts about the net branch industry in general.
If you would like to know about the opportunity I can provide please contact me by clicking here.
