Can Your Broker Be Your Lender? (Part 2)

Peter G. Miller
OurBroker®

In the first of two columns we looked at the matter of why it is that real estate brokers are increasingly involved in the loan origination process. Because such activities are fairly recent, we asked David F. Broadbent, President and CEO of OnePipeline.com, a national firm which helps real estate licensees originate mortgage loans, to discuss the subject with us.

There is a consultant study which says in a few years that 30 percent of all loans will be originated online. Is that a reasonable projection?

I believe this figure is overstated, and many industry experts now acknowledge that. The reality is that getting a home loan is the single largest and most personal financial transaction that most people make in their lives, and expecting droves of home buyers to do this online without the benefit of working with someone face-to-face is proving to be unrealistic in the absence of some clear driving advantage for doing so.

Is it fair to say that lending works better online than realty brokerage because commodity pricing impacts lending but not home values? That is, for many borrowers, loans are a commodity -- one FHA mortgage is the same as another, the only question is cost.

This has proven to be more accurate in refinance markets where the homeowner has nothing to lose. On home purchase loans where a mishandled transaction can result in the buyer NOT getting the property they want the online closing rate is less than one percent today. Consumers increasingly want to receive all their home buying services from a single source they know and trust, typically their real estate agent.

OnePipeline makes this possible through our automated mortgage compliance system that enables agents to originate mortgages directly. Through our system, originators can do everything online, which typically provides more efficiency and access to the best lenders while their clients get to work directly with the person they have chosen to assist them and not just a faceless online service. It really allows the consumer to receive the best of both worlds.

At this point, approximately how many real estate licensees have signed up for your program?

About 7,000 agents and 200 brokers.

Can you provide a sense of production at this point in terms of loan origination by number volume and by gross dollar amount? (In other words, provide some measure of growth.)

It's hard to calculate because we are not a lender. OnePipeline is a service provider that has created an online technology solution that empowers lenders, brokers and agents to collaborate in providing a one-stop buying experience for the consumer. We are currently working with, or in negotiations to work with, many of the top mortgage lenders in the country and some of the most influential real estate organizations.

Are there states which to this point will not allow your program? Which ones? Why?

We are licensed in 46 states now and have licenses pending in the others, as well as Washington, DC and Puerto Rico. We fully expect to be licensed everywhere very soon. There are specific regulations in 4 states that restrict the manner in which this service can be provided or the compensation paid.

Is there a profile for a typical realty broker in your program -- that is, traditional broker, buyer broker, independent, someone working for a franchise, etc?

We are signing up the largest real estate offices who in turn recruit their agents to utilize our technology and services. The individual agents represent the full spectrum within the industry.

Do you survey consumers who have used your system? What are their likes and dislikes?

We are a B-2-B player and don't deal directly with the consumer. Our focus groups with Realtors and Brokers have been very positive, and educational. We continually make changes to our system based on feedback from the agents and brokers we work with every day.

There are now some 2.2 million real estate licensees nationwide (most are inactive). How many are needed to build out your system?

All licensed agents are able to use our system and consumers are starting to ask agents in advance if they are qualified to also provide loan origination services which helps drive our adoption rate. The more brokers and agents that participate the greater the awareness and the more valuable the service becomes. There is no specific number required to make the system work. We hope to have all the best and brightest in the real estate industry enhance their professional services by offering loan origination directly to their clients.

What qualifications must I have as a licensee if I want to use your system?

Professional guidelines vary greatly from state to state, but from our perspective, you must also become a fully trained part-time employee of the OnePipeline license and obtain appropriate individual mortgage originator licenses for any specific area. Usually this is a relatively quick and easy process.

What classes and training will be needed for me to use your services as a broker?

Again, there are various state requirements in this area. OnePipeline requires originators to complete our basic two hour course and then we encourage them to continue with additional mortgage and RESPA courses that we offer online, by telephone and/or in person. All originators are supported by a team of experienced loan processors and underwriters to ensure that the consumer receives the very best information possible from any source.

RESPA is clear that brokers must have a material involvement in a loan to justify a fee. What is the involvement of a real estate licensee in a typical loan via your service?

Again, it varies from state to state, but agents must perform actual work such as counseling the client about lenders and loan programs, taking the loan application, gathering verifications, ordering credit reports, attending the closing, explaining documents and procedures, etc.

There is much talk of a "paperless" mortgage. Is this here? Is this coming? What if an error is recorded in public records? As a consumer, can I opt for paper?

Unfortunately is isn't really here yet but we are very excited about this concept. As dramatic as the consumer direct online origination business has languished on the front end of the transaction, there has been equally dramatic progress made in automating the back end of the business. Automated underwriting and credit services and greatly improved processing platforms are leading the way. Of course we believe that automating the regulatory compliance management is important to achieving this goal as well.

Real adoption of electronic signatures through all the state and local government recording agencies will take some time yet. I believe that once the entire back side of the mortgage transaction is automated and integrated there will be much less room for errors than the current process allows. The consumer will probably have the paper option available for some years to come.

Some states license mortgage brokers, some license mortgage bankers, some license both, and some license neither. Should there be licensing in all states?

In a perfect world, it would be nice to have one national standard. The reality is that current changes are moving us further away from this every day. There are over 1600 state and federal regulations that we must monitor continually to provide our compliance guarantees, as well as hundreds of professional guidelines that affect third-party loan origination today. OnePipeline is the only company with an automated system designed to navigate through all these laws and regulations and ensure safe, legal, third-party mortgage origination. We have numerous patents on the compliance automation space to support our goal of becoming the industry standard for this service.

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Question Of The Week

Q I'm a licensed real estate salesperson and would like to work for two local firms. Is this possible?

A In most states there is a "broker" license which allows individuals to contract directly with the public, and a second license -- usually called a "sales" license -- which allows individuals to work in real estate under the authority of a broker.

The instant problem with working for two brokers is that if something goes wrong which broker, if not both, will be responsible? If you are licensed with brokers Smith and Jones, will Jones get the benefit of your training with Smith -- and vice versa? If you get a great listing or buyer client, which broker gets the business? What if one broker is an exclusive buyer broker and the other is not?

For specifics, contact your state real estate commission or department for their guidelines. Expect at least a requirement to obtain written permission from both brokers, and check with your E&O carrier regarding coverage.

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Published: September 27, 2000

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .