It PAYS to be INNOVATIVE . . . 100% Commissions!

Is the net branch, that your mortgage brokers license is hung with, turning a blind eye to compliance and quality control?  Is the company taking short cuts in the name of profitability?  Chances are that the company is on the verge of imploding.

As the slowing economy, the slumping housing market, and multiple mortgage stings have revealed, mortgage fraud has been rampant throughout the industry during the last several years.  As a result, mortgage broker shops, net branch companies, and wholesale lenders are closing their doors or filing for bankruptcy.  Many such companies are subject to government raids and takeovers.  Some mortgage broker shops are having to buy back loans gone bad.

The signs are usually obvious that a company is struggling to manage the consequences of fraud, misrepresentation and poor compliance policies.  Often management is slow to respond or reply to brokers support needs.  Commissions often take longer to process and sometimes never make it into your account.  The approved wholesale lender list also slims down as the broker's approval is revoked.

Failing net branches and broker businesses can wreak havoc on your pipeline.  Good brokers with solid business wind up getting left in the lurch as the company crumbles.  Borrowers are left at the closing table without funds.  Transactions fall apart and realtors lose commissions.  There are steps you can take to protect yourself.

First and foremost you need to stay plugged in to the company with whom you broker.  Don't stick your head in the sand.  Don't be afraid to ask questions of management and expect honest answers, especially if you notice any signs that indicate the company is struggling.  Ask questions like, "Is the company in the midst of any Federal or State audits?"  If the answer is yes, then you need to ask what prompted the audits.  Inquire whether "any wholesale lenders revoked origination privileges?"  If so, was it a result of the brokers actions?  You should also ask whether any complaints have recently been filed.  It is time to consider a change if your company fails to answer such questions directly and honestly.

Second, evaluate the net branch's compliance process.  Ask yourself some key questions, such as "Are all the necessary compliance items required by the State being fulfilled by my loan package?"  There could be a problem if your company fails to require specific dislcosure that you regularly provide to your borrowers.  Is there a particular company requirement in the manner in which your disclosures must be completed?  Poorly executed disclosures subject the brokerage business to State sanction.

Finally, does the company have any quality control processes?  Absence of quality control is a formula for self-destruction.  Is the quality control consistent or sporadic.  Ask yourself, "who validates my originations and supporting documents?"  If your files aren't being reviewed and occasionally audited it is likely that no other originator files are being reviewed.  You can trust yourself, but it can be a costly mistake to trust that all other originators do the same quality, legitimate, and compliant work.

You have worked hard to build your business.  You invest a great deal of time retaining your clients.  The last thing you want is to expose your business to reckless net branch operations.


Posted by Bryan P. Ehrlich, President on August 12th, 2009 12:48 AMPost a Comment (0)

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