While the one-stop-shopping trend continues to build, many brokers are looking at adding mortgage banking services to their real estate brokerages. Not only can brokers increase their profits by offering lending services through a partnership or subsidiary, they can continue to serve customers throughout the homeownership cycle, including equity loans, home improvement loans and lines of credit. But is having an on-site lender just for the big brokers?

Not today. Big banks are reaching out to real estate brokers of all sizes to get more business, and that includes devising programs that fit a broker's budget as well as tolerance for risk. If you are interested but haven't chosen a lending partner yet, you may be surprised to learn that no matter what your size, you can partner with one of the leading banks in the nation.

Look for longevity, reputation, and resources

Wells Fargo Home Mortgage, Inc. is a subsidiary of Wells Fargo & Company, a $280 billion diversified financial services company providing banking, insurance, investments, mortgage and consumer finance throughout all 50 states in over 5,400 locations. The mortgage group has grown tremendously over the last decade, until it is one of the leading originators and servicers of residential mortgages, providing funding for approximately one of every 15 homes financed annually in the U.S. Wells Fargo Home Mortgage is not only a leading lending partner to real estate brokers but also to builders.

According to Brad Blackwell, national sales manager for the Pacific markets, Wells Fargo Home Mortgage, you can have a banking relationship that goes beyond the "I know you and you know me" tradition. "A realtor should not be intimated by the size of Wells Fargo," explains Blackwell. "Don't pick an accordion lender that is in the market when times are good and out when they are bad. A lender like Wells Fargo is in the market all the time. By choosing Wells you are choosing consistent long-term service for the customer. "

Look for partnering options

Wells Fargo Home Mortgage offers three plans that help you decide the degree of risk and reward you are comfortable taking in order to build a mortgage brokerage business:

1. Desk rental

   As with commissions, you share the risk/reward with your lending partner. Desk rental offers the real estate broker the lowest risk in terms of investment, but the return is also the lowest.

   You can lease a desk to a Wells Fargo mortgage lender. As an employee of Wells Fargo, this broker will not be on your payroll. As you do get a piece of the loan, it's in your interest to allow the mortgage broker access to your agents to bring in business. Invite him/her to sales meetings and allow scheduled times for the mortgage broker to talk to the agents.

2. Marketing agreements

   This is a low risk, medium return option.

   RESPA regulations prevent paying for referrals, but does allow mortgage bankers to pay for access to the real estate brokerage's customers. Through a marketing agreement, Wells Fargo will offer its services alongside yours, and split the advertising fees. "If your agents are selling a home to a customer, and you give me the ability to offer mortgage then we will pay you for that access," says Blackwell.

3. Joint venture

   This option is the highest risk, but also the highest reward, and the only option where the real estate broker invests capital of his/her own.

   A joint venture is more complex, but it is a turn-key arrangement as far as you, the broker are concerned. You and the bank establish a subsidiary to your brokerage, that you can name after your own brokerage or a new name.

   When you work with Wells Fargo, the bank will establish, staff, manage and provide all the accounting for an in-house mortgage brokerage, and split the proceeds. "We put in an equal amount of capital and split the profits," says Blackwell. "This is set up on the premises with total access to real estate agents.

Call for a consultation

National banks will have local management who are able to explain their service offerings, give you an evaluation, and help you with your mortgage banking business plan. "You can look in the Yellow Pages," says Blackwell, or you can go online."

At Wells Fargo, go to the Web site and punch in geography. A list of local managers will pop up.

"The local manager will make an appointment with you to talk about various options," says Blackwell.

Published: August 23, 2001

Use of this article without permission is a violation of federal copyright laws.