Hello,

I've been in the real estate and mortgage business for the past 8 years in TX. I'm considering starting a new mortgage company utilizing realtors as the loan officers. I would initially start in TX and then move into other states. The main idea would be to focus on the realtors and try to make it easy and cost effective for the realtors to offer loans to their buyer clients. According to my research, it would most likely be better to start operate as a mortgage banker and directly underwrite the loans. To make it easier we probably offer a very limited assortment of loan products. We would use web technology and make it as easy as possible for the loan officers to quote the loans to their clients. Pricing would be very competetive and we would charge very little in the area of points or other fees. We would invest very heavily in web technology and would hire an excellent staff of processers, underwriters, etc.

It seems like a good business model. I'm aware of only one other company that is currently doing this successfully Id appreciate any input you would give on this idea.

Also, for you brokers I would like to know if you'd allow your agents to participate in this program. Just so you know I'd purchase an e&o insurance policy that would indemnify the real estate broker as well as require the agent to have their client sign all disclosure forms. I appreciate your help with this.

There is nothing wrong with this type of business model. This type of business model must function as a separate company. RESPA allows such a business model, provided the borrower understands the relationship between both companies and that other service companies are available. However, fees may not be exchanged for referrals. Your loan officers may receive compensation only on a profit-sharing basis. In most states, your realtor would need to have a mortgage broker license or loan originator license in order to to quote loans to their clients.