Flat Fee Net Branching

NuPlace Lending enables branch managers to originate as many loans as they please for a flat monthly fee of $1,395, according to company spokeswoman Debbie Ryan.

The Memphis, Tenn.-based subsidiary of Dollar Investment Corp. started up in March and offers the program to mortgage professionals with at least two to three years experience who affiliate under its net branch operation, Ryan said.

NuPlace, licensed in 12 states with 26 licenses pending, also charges a monthly administration fee of $199, according to the Web site.

“We are a new revolution in mortgage banking because other companies don’t allow you to control your own bank,” Ryan said. With their own account, branch managers have direct control to deposit and access the funds they receive for loans closed.

As opposed to other net branches that offer flat-fee programs, NuPlace includes the cost of loan Error and Omission Insurance in the flat fee, and the company is a lender in addition to its role as a broker, she added.

Robert Brandolino, spokesman for Residential Finance America, said that flat fee programs give branch managers the advantage of saving money, but a disadvantage is that they are difficult to administer.

“What I hear from branches that leave the flat fee programs is that ‘The corporate office never has enough people to support my needs,'” Brandolino said.

Charging a flat fee for a high number of loans every month may ultimately leave the company short of the income needed to have sufficient support staff for things such as compliance checks and regular follow up visits to the branches, according to Brandolino. He said he sees flat fee programs as a short-term way of getting branches in the door that are poised for change in the future in order to increase income and keep operations running smoothly.

At Residential Finance, fees do not apply to loans funded by the company, only to loans brokered out to other lenders for funding, Brandolino said.

Asked whether NuPlace would offer the flat fee program in the long run or if it would be changed, Ryan said it is a long-term plan “because we spent a lot of time getting our infrastructure together” before launching the company. “Our infrastructure is strong.”

Ryan added that NuPlace has the support staff necessary to establish a relationship with branches to avoid high turnover as “keeping them is the end result.”

At All Fund Mortgage — which along with NuPlace and Residential has advertised at MortgageDaily.com — rather than paying a flat fee, branch managers pay a per-loan fee depending on which of four categories the lender they choose falls into, according to spokesman Eli Koransky.

He added that All Fund has relationships with eight correspondent lenders and more than 280 wholesale lenders.

All fund charges fees ranging from a flat $250 per transaction to $425 for larger loans.

Of All Fund’s four different fee categories, the first three apply to loans funded by the correspondent lenders.

Koransky said he knows of companies that are not federally chartered that charge a per-loan flat fee priced just a little higher than All Fund’s first category fee. “For a company that doesn’t plan on growing, I could see the flat fee working, but for growing business and opportunity, I don’t think it’s a good model,” as it will not give the corporate office much room to increase overhead.

Asked for his opinion on monthly flat fee programs, Koransky commented, “It all has to do with track record. We’ve got to remember that longevity is the number one reason that a borrower chooses a broker over another company. We’ve been in business 14 years. So, there’s companies popping up just like interest rates that’ll offer you the world, but can they stay in business 14 years?”

He also said that paying a monthly flat fee upfront could possibly lead to a “lack of compliance.”

Ryan retorted, noting NuPlace examines formerly funded files of new net branch manager prospects and does follow up visits afterward.

“You’ve got to go see if they’re complying,” she said. “We are zero tolerance on fraud.”