Add another point on the scoreboard for exclusive buyer's agency.

A Memphis, Tennessee mortgage cooperative owned by two-thirds of the franchisees of THE BUYER'S AGENT franchise has just received the federally-insured nod from Freddie Mac, which has agreed to buy the cooperative's mortgages.

Created by THE BUYER'S AGENT founders Tom and Donna Hathaway, SouthMor Mortgage Corporation was sold in April to their franchisees, making it the first franchisee-owned mortgage cooperative in the United States.

According to the company, SouthMor's mission is to provide deeply discounted mortgage loans to clients of THE BUYER'S AGENT. The cooperative will also make loans to non-clients, but may vary the rates according to whether the borrower uses one of THE BUYER'S AGENT franchisees to purchase a home or uses a competitor. Non-clients, says the company, will pay rates competitive with the local market and profits from those loans will be paid to the stockholders in the form of dividends.

The cooperative neatly sidesteps any potential RESPA violations by making the loans non-profit to clients of THE BUYER'S AGENT network. No origination fee is charged, and normal lender "junk fees" are provided at cost. For example, lenders routinely mark up line items such as credit reports ($50,) documentation preparation ($200,) and loan underwriting fees ($150.) SouthMor charges what they cost - about $16, $25 and $25, respectively.

"Borrowers can see what they are saving," says Hathaway. "It's right there on the good faith estimate, which we provide just like any other lender within three days of application."

The exclusive buyer's agents can sit down at a computer with clients, keyboard into the software, and obtain a pre-approval over the Internet in 15 to 20 minutes.

According to Dawn Davis, Executive Vice President of SouthMor, SouthMor can already provide mortgages in 42 states. Davis said, "We are able to provide mortgage loans to more than 85% of the people in the United States and we plan to increase that to 100%. Applications are currently pending in several of the remaining states."

The company has come up with a win-win-win-win plan which saves borrowers money, gives a competitive edge to THE BUYER'S AGENT franchise owners who are shareholders of the mortgage company, gives franchise agents an edge, and the lenders benefit by loaning less money on homes that have been purchased through exclusive buyer's agency.

According to the company, THE BUYER'S AGENT won a round in the Oklahoma Supreme Court in 1999 when the Court agreed that "franchisees of THE BUYER'S AGENT could offer more complete representation to home buyers than agents who represent sellers and that they had saved their clients thousands of dollars."

Now the franchise is out to prove that it can continue the savings to buyers when they apply for buyer-agent friendly loans.

But the franchise still has some battles ahead. The Oklahoma Real Estate Commission was able to get legislation passed that eliminates the word agency or agency relationships from its representation forms. Although it is unclear how the commission plans to enforce the new law, early speculation is that licensees will no longer be allowed to call themselves agents or to act as agents on behalf of clients. Unless the commission brings charges against a BUYER'S AGENT licensee for calling himself or herself "an agent", it is unclear what action the commission will take. The law will go into effect in January, 2001, but pre-licensing trainers are already receiving their instructions on how to interpret and train the law.

Stay tuned.

Published: August 18, 2000

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.