TIMING
How long will the approval of my company license take?
The approval process for a new company license typically takes 3 to 5 weeks. However, the time frame is ultimately dependent on the state you register in.
How long will it take to become an independent mortgage broker?
On average, it takes 45 days to complete the requirements necessary to become a licensed independent mortgage broker also known as loan originator or loan officer. However, this may vary depending on the state you’re registering in and your ability to pass the required examinations and background checks.
FEES, COSTS, & COMPENSATION
What are the startup costs for opening up an independent mortgage brokeR SHOP?
The start-up costs for an independent mortgage brokerage will vary from state to state. For example, most brokers can expect to pay approximately $10,000 if they conduct business in a state with a brick and mortar requirement. If brokers plan to conduct business in a state with no brick and mortar requirement, they can expect to pay $5,000-$7,000. There are also other costs associated with obtaining proper licensing and maintenance of your business, such as annual licensing fees, entity formation and registration fees, fees for obtaining a surety bond, and legal fees associated with maintaining a compliance management system
What are the costs/requirements to set up a credit reporting account for my company?
In most cases, the cost to set up a credit reporting account for an independent mortgage brokerage is $120.
How does compensation work?
When a loan that you originated is closed, you are paid a commission by the lender of the loan. Commission rates can vary widely based on the mortgage type, length of the mortgage term and the lender. The terms governing how you are paid by a lender is known as a Loan Officer Compensation Plan.
RESPONSIBILITIES
What am I responsible for in the loan process?
Independent mortgage brokers are responsible for managing the borrower relationship while originating a loan, including discussions regarding possible loan products, submission of a loan application to a Lender on behalf of the borrower, the submission of required documentation to cure Lender placed conditions during the underwriting process, and ensuring that borrowers are provided with all required disclosures during the loan origination process.
Am I required to acquire a commercial office space? Can I work out of my home?
This will vary from state to state. If you plan to conduct business in a state with a brick and mortar requirement, working out of your home won’t be an option. There are five states in the U.S. with a brick and mortar requirement: Arizona, Hawaii, Missouri, Nevada, and Texas
PROCESS
What technology will I use?
You’ll use:
A Loan Origination System (LOS) to manage the lending process and a business website to attract more prospective homeowners
A Customer relationship management (CRM) software to reap the benefits of a good communications specialist, without actually hiring one
A Point-of-Sale (POS) system which allows prospective homebuyers to complete 1003 applications, as well as upload and e-sign documents.
By partnering with certain wholesale lenders, you could have access to their available technology to help reduce your startup costs. For more information, check out our blog post, “Must-Have Tech Tools for Independent Mortgage Brokers.”
What is compliance like for owning a new shop?
Managing your compliance needs when owning a mortgage brokerage is one of the most important aspects of your business. Maintaining compliance involves formulating a compliance management system to ensure that your business follows all applicable state and federal rules, regulations and guidelines governing your business’ processes, including the issuance of required disclosures throughout the loan process, the creation and use of marketing materials, the retention of records associated with your business and the initial licensing/annual licensing renewal process. For more information, check out our blog post, “Mortgage Brokers’ Step-by-Step Guide to Compliance.”
Do I need to have a processor?
Independent mortgage brokers are not required to have a processor, but we advise broker-owners to retain a processor. A processor can be vital to your organization since they manage the process for compiling a consumer’s information and financial data for submission to possible lenders as part of the application process.