In-House Underwriters for Brokers, Net Branches

MortgageTree Lending announced it offers a program that gives independent mortgage brokerage companies significant control over the loan process, allowing them to underwrite loans, draw loan documents to their loan programs, sign off on loan stipulations for more efficient, streamlined transactions for their clients.

“One of the things that’s very attractive about being a broker is to have the independence to take the product and place it wherever,” said company vice president Diana Grossmann in an interview. With MortgageTree’s program, brokers continue operating under their own approvals and are able to keep brokering out to other lenders, she added.

Brokers are empowered to underwrite and close loans with the placement of an underwriter, provided by MortgageTree, in their shop, explained Grossmann. Providing on-site underwriters is a practice already performed by large wholesale lenders, but it is likely the underwriters exclusively write loans for that particular lender. The advantage with MortgageTree, she said, is that the underwriters it provides are able to write loans for a variety of lenders the net branch has correspondent agreements with.

The in-house underwriting includes the net branch’s own products and those of its correspondents, which support a variety of loan programs, including conventional, FHA loans, Alt-A and subprime.

Some independent brokers may “look at 10 to 15 different rate sheets, and work with 10 to 15 different companies in order to offer various products because some companies are only subprime, some only accept Alt-A, some will only do conforming or nonconforming. Whereas our product covers all of those. So, they only have to go with one source and establish a relationship with one company in order to be able to offer all those products,” Grossmann said.

Greg Allen, vice president for mortgage banker Superior Mortgage Corp. (a MortgageDaily.com advertiser) said it seemed that the program is “meeting some resistance with brokers to become a net branch.” But “if I were a broker, I’d be saying ‘Well what’s the luxury of having an underwriter in my office if I know that every month I have to send at least 50 percent of my business through [the provided underwriter] and what if their rates aren’t good, or what if their products aren’t good or what if I don’t like the way the loans are underwritten?’ It wouldn’t excite me at all.“

Superior chooses to provide on-site approved underwriters for only a few number of experienced brokers affiliated under its net branch operation. “The right branch manager and the right underwriter, they have the power to do that,” Allen said, adding that providing underwriters can be expensive. “If Superior Mortgage had underwriters scattered all throughout the country in all these broker shops…maybe investors won’t mind. But I would be very uncomfortable with that,” he added.

But, MortgageTree’s “program isn’t open to every broker,” company executive Grossmann said. “We are not looking to do typical wholesale business with a broker who has multiple lending sources and who may occasionally get a loan. We are very selective as to who can come into the program.”

While brokers’ situations and long-term plans are individually evaluated, the MortgageTree executive said the net branch lender is looking for individuals who do 40 plus units per month for a mixture of products, and are willing to commit to a one- to two-year partnership in which they will provide MortgageTree with “a minimum of 40 to 50 percent of their product.”

Grossmann added, “If you look at it through the industry, brokers still have their lenders that they pretty much place 40 to 50 percent of their product with because they get great service.”

“We are screening them to make sure that the loan products we offer meet their requirements so they don’t have the need to use multiple lending services.”\

In addition to providing brokers with in-house underwriting, MortgageTree provides independent brokers with support for marketing endeavors and the training that is offered under its net branch program, the executive said.

Other than complying with the business agreement made with MortgageTree, the program is not an extra cost to brokers. Fees that apply are the “standard administration fees that appear on the HUD-1 — no different from a wholesaler,” Grossmann added. “We’ll charge our underwriting, funding doc fees on the HUD-1 to the consumer.”

“It’s really not about how much business you’re doing today,” other than passing the screening modules, “it’s how much business can you do a year from now as a result of partnering up with us,” she said. “And if we cannot enhance, provide value to their existing operation then it’s a relationship we will not enter into. It has to be a win-win situation for both the broker and MortgageTree.”

At All Fund Mortgage (another MortgageDaily.com advertiser), loan officers with verifiable experience and brokers who affiliate under its net branch operation are offered underwriting through its corporate office in Tacoma, Wash., and through underwriters of its correspondent lenders, said company spokesman Eli Koransky.

All Fund says it is a direct lender with eight correspondent lenders, and underwrites for two of those correspondents at its central facility. Its in-house underwriters are reportedly also FHA approved. Included within the mostly conforming loan programs are FHA programs, according to the spokesman.

Allied Home Mortgage Capital Corp., with about 250 branches nationwide, has relationships with several wholesale lenders to which they broker their loans out to for underwriting, according to company spokeswoman Lisa Legrow. One of those lenders places what Legrow referred to as a “pre-underwriting” or “junior underwriting-” type employee, at the net branch’s corporate office in Texas, who reviews the loan files, for things such as proper stacking order or possible information skips, and offers an “extremely quick turn around time on those files.” Allied is working toward having all the lenders it works with to provide it with this type of employee.