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How to Become a Mortgage Broker

Feb 06, 2021


If you’re already a successful loan officer working for a mortgage bank, retail bank, credit union, etc., making the leap to getting your own brokerage license can be challenging yet potentially very rewarding.

If you’re not already in the industry but looking to change that, you’ll first need to know about the different job titles that exist. This is important, as what most people think of as a mortgage broker is actually a licensed mortgage loan originator. They may work for a bank, a mortgage company, or with a licensed mortgage brokerage.

The distinction is technically that a bank, mortgage bank, credit union or other direct mortgage lender is typically making a loan in its own name, even if it closes and is later sold. A mortgage broker does not make home loans; they arrange them for closing with a third-party lender. 

If you are looking to enter the industry, another article focuses on becoming a loan officer, and it’ll be a better place to start.

Those looking to start their own business by obtaining an independent mortgage broker’s license, read on.

Getting Licensed as a Mortgage Broker

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As a licensed originator, you already know how things have changed. You’ve been through the process of taking continuing education classes, passed the tests, been fingerprinted, paid your fees and ultimately, been granted the privilege of helping your clients obtain their needed mortgage financing.

Now, you’ll get to go through an even more arduous process to obtain a license to conduct business on your own. From the government’s perspective, you have more responsibility in this role, and thus, the application process entails more.

To get started, first know that a mortgage broker’s license is state-issued. This means that the process can and will vary from one state to another. You can find your state’s requirements here.

Each state will have a governmental agency charged with overseeing or managing the process. As an example, in New York state, it’s the Department of Financial Services.

You would start by completing and submitting an application for review and hopeful approval. Again, using NY state as an example, an approved applicant would then need to submit a surety bond and proof of a line of credit. There would also be a conferral meeting, after which, if all requirements have been met, such as background searches, a credit report, fingerprinting, etc., a license certificate would then be issued.

What’s the next step in the journey to becoming a mortgage broker?

Congratulations! You’re a licensed mortgage broker! As you may have guessed, having a license is just the beginning. You’re a broker now, which means you’re a middleman. You need clients, which means sourcing leads, and just as importantly, you need lenders.

You probably already have a book of clients, of course, and if you have already worked in a mortgage bank that can broker out or in a true broker shop, you’ll at least know some lender reps that can help you get an application in for approval on your own. Just be prepared, as this typically entails a whole new approval process.

Banks, especially the large money center banks, have pretty stringent standards regarding who they will approve to submit loans. They remember all too well the losses from past credit crises. It wasn’t fair as a whole and was certainly very unfair for many of the honest, hard-working brokers that existed, but much of the blame for past problems was placed on brokers. The bar remains high as a result.

And one lender is not nearly enough for a successful brokerage. The whole idea of being a broker is to offer choices to your clients and prospects. Otherwise, you may as well work at a bank that only offers its own products. Whether it’s pricing, underwriting, restrictions on marketing to your own clients, or the mix of available loan products, not every lender is going to best suit your needs and those of your clients.

Diversity Is Key

Even if you specialize in certain loan types or markets, having what your clients need is key to success and also key to not being pigeonholed by real estate agents as “the VA guy” or worse, the “no jumbo loans guy.” It’s great to have a specialty; it’s greater to be a specialist in helping most anyone so long as you have the skills to be a master of many.

It will take time to amass a book of lenders that you work with. But it gets easier, as once you’re approved with some, others will view you more favorably, especially if you are writing a fair amount of new business.

Concentrate on what’s best for you and your usual customers first, then expand from there. It’s a wonderful feeling to know that, as your own boss, you are free to pursue any lender relationships you want without someone in an ivory tower making the calls while not understanding the needs.

If you want to write FHA, VA and USDA, go for it. If you want to have super-jumbo loans for high-net-worth borrowers, do it. If you want to work with smaller independent builders and need construction loan financing, have at it.

There’s a whole world of possibilities out there – from lenders that often have the best rates to mortgage lenders with the lowest closing costs to lenders that might be a little more flexible on the lowest acceptable credit scores, the best loan programs, etc. Just be careful not to get so diversified that you lose control and familiarity with each lender and their programs.

It’s just as important to know what really flies with each vs. knowing only the generic guidelines. Plus, the more business you do with fewer lenders, the more valuable you become to them. That can be worth its weight in latitude on that deal with a very “subject to interpretation” issue that makes it a dicey go or no go.

And, of course, you run the show now. You know from working for others that there’s an important economy of scale applicable to almost everything you will do from here on out. That means not being able to justify a nice office unless gross income supports it. Same for having a great processor, office manager, equipment and, with all that, the ever more important other loan officer recruits to help keep the office pipeline full.

The boss life isn’t for everyone. You’ll find that you’ll be so busy running things and managing those lender and real estate agent relationships, regulatory responsibilities, and financial filings that you’re really only likely to survive if you have an additional salesforce bringing in the loans.

Managing all these people is a job unto itself, of course, so before taking the leap, be sure you are confident in your abilities. If you’ve risen to sales, branch or regional manager with your current company, you already know and have the right kind of experience. Making a decision from that point is a lot easier than if you’re still relatively new to the business and haven’t seen a downturn yet.

All in all, there’s undoubtedly a risk to becoming a mortgage broker, but a very high potential reward as well, and isn’t that the way it usually works with anything worthwhile?

Go From Mortgage Broker to Top Producer With a Marketing Automation Engine

Lastly, if you’re going to explore or have already decided to make a move, start your new business off right from the start and be sure that you’re taking advantage of today’s technology in every way that you can. You will need a modern LOS just to get rolling. Efficiency is key, and so is efficacy. A top-notch CRM program will be part of that mix, making sure you can get the word out and keep it out there with friends, clients, agents and other referral partners. Be certain to launch your corporate social media brand and fuel it with content that engages your audience.

To experience a world-class mortgage CRM system that’ll help get you up and running and then keep your database management and marketing in great shape, set up a demo with Surefire from Top of Mind Networks today.

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