Net Branch Showdown

A slowdown in the housing market amid inflated home prices and rising interest rates will fuel MortgageBrokers.com Holdings Inc.’s business model of consolidating small- and medium-sized brokers, the Canadian company announced Wednesday.

“With a declining mortgage origination pipeline and tighter margins, the over 40,000 [small- and medium-sized] mortgage brokerages will seek cost and technology advantages so they can survive the slowdown in the market,” commented chief executive Alex Haditaghi in the announcement. “Our consolidation model addresses long standing industry issues of ownership and retention of top originators for mortgage brokerages and originators.”

MortgageBrokers.com, with U.S. headquarters in New York, had previously referred to its program as a limited-availability franchise model to small- and medium-size U.S. enterprise brokers. Competitors noted at the time, however, that the business model conflicted with HUD guidelines and with licensing regulations in some states.

Brokerages that sign up with MortgageBrokers.com will reportedly save between 30% to 40% of their overhead and fixed cost by leveraging the company’s shared services environment for payroll, compliance, human resources, technology, marketing, and loan processing.

“Consolidation of books of business from mortgage originators will enable MortgageBrokers.com to better leverage with lenders for revenue and rate discretion, through the pooling of origination volumes and control over channeling of mortgage volume,” the company said, adding that its lead generating system, national brand and technology platform will also enable brokerages to better compete in the mortgage market.“

MortgageBrokers.com claims that under its business model, brokers can concentrate on sales and marketing and therefore hire, train and retain more loan officers.

Earlier this month, Benchmark Mortgage announced it offers 100 percent commissions and low transaction fees.

The Dallas-based mortgage banker said it has broker relationships with more than 200 banks and investors, and the programs involve no upcharge to its branch partners. Among its offerings are option ARMs with 1% introductory rates, jumbo loans as well as FHA and VA loans.

Benchmark, which reports a network in excess of 200 branches, noted it was ranked 57th on the Inc 500 List of the Fastest Growing Private Companies in America. The full-service lender reportedly underwrites and closes mortgages, selling them in the secondary market. Its monthly warehouse lending capacity is $130 million.

Benchmark said its Web-based proprietary automated underwriting engine enables partners to receive instant conditional approvals. The company noted its new loan originating system offers “the speed and cost savings of a totally paperless Web portal to originate, present for approval and submit loans for underwriting, closing, funding and payroll.”