What is Mortgage Net Branching?
Mortgage net branching is a great way for a large mortgage company to extend its reach and a new lender to get its start benefiting from an affiliation with an established company. This arrangement allows the larger player to expand without having to lease or purchase new property, hire, train and manage new personnel and do additional marketing in a new location. The smaller lender already has all of its tools ready for operation, and it functions as a kind of franchise of the larger company. This allows the larger mortgage lender to further improve its reputation and make its name known and the smaller company to benefit from more business from local customers who recognize the larger company. Net branching companies should look for a few important factors before making their decision about forming a partnership.
What the Larger Mortgage Company Should Look for?
When a mortgage company is hunting for a smaller lender to work with, there are a few things to consider. First of all, they should find a smaller company that is functioning well on its own but may need the push of a more influential and experienced partner. The branch should be well-managed, and the strength of the net branch manager is an important ingredient in the ability of the smaller branch to thrive. In addition, the branch should have a healthy customer base, because those people will become the customers of the larger company. For a net branch partnership to work, not only should the business structure be healthy, but the kinds of loans and mortgages should also be stable. The most reliable net branching companies lend to people who have financial stability and will not default on their loans. Any problem with the existing loans and mortgages will become a problem for the larger company, so the stability of the customers should be looked at, in addition to credit scores.
What the Net Branch Should Look for?
The net branch should work with a mortgage company with a solid reputation that will get customers into the door. Mortgage brokers like to have the name of an established lender to back them up and to inspire confidence in potential customers. The net branch may like to have some autonomy to make a number of its own decisions, so they should take into account how much control the larger company intends to have over day-to-day operations of the net branch. Some smaller branches are ready to take direction from a larger company, whereas others are accustomed to doing something their own way. The net branch partnership depends on coming to an agreement on these issues.
An Easy Way to Expand
An established lender can extend its footprint into new areas with less hassle and expense than would be required if everything was done from scratch. For instance, it could use the licenses of net branching companies to grant mortgages in certain states without the main company needing to go through the expense of obtaining a license. This makes the operations easier and is a benefit for major mortgage lenders that want to grow geographically.
