Need Help On Starting Mortgage Company
The reason this post is going here is because I know there are some experienced professionals on these forums. My partners and I want to start our own mortgage company within the next few months. We have a very very very large loan that can be closed as soon as we start that will get us into the black for the rest of the year. My problem is that I'm finding a very hard time getting resources on what steps we need to take from A-Z. Our collective experience in the lending industry is low. Does anyone know of any resources, advice, or place to go for more information on starting a mortgage company. ANY help would be appreciated. Thanks.
-Adam Sepanski
**Please See My Profile**
Use the web to check the laws in your state. See what the regulations say for being a MB? License requirements, etc.
Then you need to figure out how to line up a lender who will work with you to place the loan.
John
[addsig]
There are diffrent mortgage companies. Usually three categories, each have their own powers and limitations. Some may have net worth req. some will not.
*** All depends on your state ***
The simplest is the mortgage broker business.
Then you have something like a C Lender, or Table Funder, (whatever it is called) basically able to originate loans. Then you have the Lender license (able to originate and service)
Look into these things. Check out your local real estate school, they may offer courses.
Colorado Division of Banking
http://www.dora.state.co.us/banking/
Before I began as a loan officer with a mortgage broker, I researched the requirements in my state to make sure I was on the right track. The goal is to have my own license & office in 2005, with plans for expansion along the east coast 2006-2008. Please keep us updated on your progress so we can all learn. Good luck!
You also may want to consider a "net branch" operation. Basically you control the business and pay the corporate co. a small percentage. The lenders and legalities are already in place so the only you have to do is originate. It's basically running a business within a business without most of the headaches. Just a thought.
Go to your state website, Saving and Loan department, the site provide the info you need and other resources. Goodluck!
Here is a link for detailed requirements for every State, including contact information. Be aware that , in some States, it is illegal to broker a note/paper without a mortgage broker license (unless you are actually buying the note yourself). In Georgia, they aggressively enforce this--even to the point of scouring over ads to find people to prosecute.
http://www.thomas-law.com/mtgbrokers.html
[addsig]
hey, im a young note researcher, kinda like a scout, and im trying to start a company myself. but my family does not support it, and i have no money at my disposal. they wont allow me to work, so i have no way of coming up. if some one would be willing to lend me a loan around 3000 dollars, i would be glad to repay them double within 3 months.
thank you.
[ Edited by princejerome2002 on Date 10/18/2004 ]
Start with the Department of Banking in the state you want to run a license through. They will list all of the requirements. Everything form crimianl checks they will need to how much you need to have in disposable cash.
Lori
[addsig]
We have researched our state and we do not need any licenses to be a broker. What I need to know is who do i contact as far as lenders go to get on their approved list. Where can I go to find out rates? Is there a mass list you can join to get the rates of several lenders that we can promote?
You can get rate sheets from some companys websites - some have an automated 800 # you call and then they fax 'um some will only give them to you after your an approved broker. Getting approved with lenders depends on the lenders - fyi--a lot of them want managements resume and a copy of your fidelity and surety bonds, E&O isn't bad to have either..--
Please don't take offense as I mean this constructivly -- but there is a lot to know and you have a lot of responsibility and liability as a broker - you will need to be able to put in place compliance and internal auditing procedures, do a criminal BG check on anyone you hire-- and thats before you start proccessing loans and creating respa documents to be signed www.etc.etc.-- I could go on for a while.--
My point is if your not even sure how to get rate sheets it might not be a bad idea to go to work for a broker as a loan officer for a couple months you will learn a lot very fast and be able to network with a lot of people, and what you learn there could save you a lot of time and money in the long run..
After that, I think the net branch idea would be good idea, because they handle all the legal and compliance stuff while you learn the rest of the business-- after a while you could split off on your own. -- Also the broker business is fiercly competitive so have a lot of money and a good plan for marketing as it will be your single biggest expense on a monthly bases.
Good Luck
Oh yeh -- there is no mass list of different lenders rates I know of.-- All the rates will change daily depending on what the bond market and other factors are doing so will you need new rate sheets daily
I"ll do an update of our background so you can get a better feel of why we're doing this. My friend has a lot of money (more then enough to throw around at a startup company). Another partner has a lot of contacts in the real estate business and they have promised to give us their business. Another friend has the angle we need to close a lot of loans in our area. I am part of the group as the workhorse. I will be doing all the mundane paper work and research. And I also had some experience in the mortgage industry so i have a very basic understanding of what goes on.
The reason we want to do this ourselves is that we have access to several large clients and don't want to profit share on that. Our first loan will be $2.5 million so even a 1% profit sharing will take a lot of money. We have the drive and determination to go through with us (I can't really imagine anything stopping us), we just need the resources. We also don't have the time to work for someone else and gain experience. I recommended that we hire someone from the industry but was outnumbered because they would rather me learn what we need to learn.
So like I said help is appreciated. That last post had a lot of good info on it and I need more like that. We definitely have the combined net worth to get this off the ground and the other members of our group are very successful business people with a solid history.
What are some good lenders to use or a place with a list? What are some good resources on guidelines for closing and underwriting? Any resources on compliance laws or anything. All i know about the law portion is that we don't need licensing in our state.
Churchskiz,
There are many broker shops out there that only charge an $800 fee for a loan transaction. No headache, no admin problems and you do not need to worry about your bonding requirements. Step one, get your brokers license. After that I can hook you up with a broker shop that only charges $800 per loan file.
Churchskiz,
The best resource available for you in my opinion is National Association of Mortgage Brokers-- I think the website is www.namb.org . It will have links to your state association as well. but you can pick up a lot of info about how to get started specific to your state. They also have a lot of classes and seminars that might be useful to you.
As far as finding lenders- figure out what kind of programs your potential clients are going to need, then find lenders with those programs.-- there is a broker forum called the broker grapevine or broker universe that might help too.
Some things you want to know about your lenders are as follows.
1. There fees
2. There underwriting time
3. there yield spread policy and how good it is compared with other lenders.
4. If you see a lender you like contact thier wholesale department and they will tell you what you need to get approved to send business through them.
5. some lenders have a program where they have higher payouts and faster turn times in underwriting if you send them enough business.
Good Luck
Once you have followed all the legal requirements (license, net worth, etc) you can go to the lenders wholesale department and sign up as a broker. For example if you wanted to be a broker for Downey Savings you could go to there wholesale group http://www.downeywholesale.com/ and sign up. They will send you daily pdf's of their rates. You do this for every lender you can think of and now you have a large group of lenders to work with. Hope this helps.
Chris
Once you have followed all the legal requirements (license, net worth, etc) you can go to the lenders wholesale department and sign up as a broker. For example if you wanted to be a broker for Downey Savings you could go to there wholesale group http://www.downeywholesale.com/ and sign up. They will send you daily pdf's of their rates. You do this for every lender you can think of and now you have a large group of lenders to work with. Hope this helps.
Chris