With the changing marketplace, many companies who developed a successful mortgage brokerage want to transition to the next level. What's involved?
I recommend becoming a lender in stages. First, master the origination functions of the business in a brokered environment. Then start investigating how banking loans impacts your financial metrics.
It's not necessarily more profitable to hold the risk and perform the functions of a lender, and you may find that pricing for banked loans is often worse than some broker outlets, causing you to experience margin compression. You should consider compensation structures and delivery/execution benefits and ensure that those things are at least as important to you as price. Most people take the first step to a lending environment by advancing into non-delegated correspondent lending to experience the processes involved in secondary market transactions like pricing and delivery.
Evolving into a non-delegated lending environment (aka mini-corr) means that you must have the following:
1.) A lender license for the state you are in (some states have combination lender/broker licenses, others have different types of lender licenses which are separate from broker licenses)
2.) Increased net worth for the lender license AND to fund the warehouse line of credit you will use to bank loans
3.) Increase compliance procedures to cover those non-lending functions that brokers don't have to worry about. Advertising, loan disposition, and HR Operations/Training/Hiring Compliance are big components. You do not need to have underwriting and closing procedures because your purchasing lender partners will prior approve and help you generate loan documents.
After 1-2 years of non-delegated lending experience, you can consider getting an independent warehouse line and start to underwrite and sell your loans. At this stage, compliance and loan quality are 100% your responsibility. You must show that you have operational controls from origination through post-closing and delivery. The Banker Package provides all this information.