It seems that the new trend in mortgage banking is to open retail branches around the country to gain increased volume as opposed to getting these loans from mortgage broker conduits. This is incredibly risky in this market, especially with all of the rapid changes to the compliance landscape. I have had numerous conversations over the past few weeks that went something like this:
Me: Do you guys have a wholesale TPO platform?
Them: No! We do not do TPO business..Too risky! We are growing our bank by opening a lot of retail branches.
Me: You realize that this can be an even riskier proposition, right?
Them: No, this way we control everything.
Me: What is your branch implementation protocol? How do you ensure that every member in every far corner of your growing empire is representing your firm and your best interests?
You see, local retail branches scattered in random markets poses even greater risks than does TPO business:
1) You are now getting ALL of that broker's loans as opposed to a percentage
2) Now you are responsible not only for the loans they submit to you, but you are on the hook for every action and reaction they take to any scenario each day
3) Every phone conversation, realtor meeting, email blast etc...Now all fall under your company's name and not their former broker employer
4) Generally speaking you are taking on a branch of people as opposed to one individual person. As a result you are reviewing the group and not necessarily taking the right steps to evaluate the merits of any one person. There are bound to be some bad apples in the bunch.
1) Meet all of the people you are looking to acquire. It may take some extra time and it involves more effort, but it is well worth it
2) Make sure you have a sound implementation process that dots all I's and crosses all T's
3) Make sure you do full background checks on all parties prior to hiring them
4) Set clear expectations with all parties. They should know what you want and expect from them. Not only regarding loan production, but also including decorum, integrity and professionalism. They have as much control over your company's destiny as any other employee. It is imperative that they "get it".
I would also highly recommend bringing in help to ensure a smooth transition and indoctrination into your process. You need to have a very capable champion managing this process. If this is an integral part of your growth then it needs to have the attention of the people at the highest levels. It can be a serious source of revenue, but can only work if it is taken very seriously!