A search for “net branch” on Yahoo lists 126,000,000 results. Most people do not go past the 1st 2-3 pages of results. With 10 results per page that 20 – 30 listing to review for information. That’s almost information overload. Granted a number of listing will not really be links to companies offering branch opportunities. Some will be news stories, general information, and a few will be site that have nothing to do with finding the best mortgage branch.

Even if you cut the number in half – that 10 – 20 companies to compare in order to make a good decision.

You should start wit a list of what are the primary features that are important to you.

Make a list. After each feature leave a space to grade the company from 1-5 on the feature, with 1 the worst, and 5 being the best.

You are not going to find a company that ranks high for all of the features that you want but with this method you are using a grading system for all of the companies that you talk to.

Also consider how they respond to your request.

• did they confirm your request for information?
• did they contact you quickly?
• did they answer all of your question honestly?
• were they evasive with any of your questions?
• did they follow up after the conversation?

In a previous posts – part 1 & part 2 I gave a list of the important questions you should ask. Please read it I think you might be surprised at the questions on the list. They are the ones most people do not ask.

The bottom line… do your homework and keep good notes for review.

Feel free to contact me if you have any questions.

I learned about this from a prospective branch manager when I asked if she was considering other companies. I asked what is was about the other company that she liked – she mentioned the ability to originate in all other states without getting the normally required licensing.
Naturally I wanted to know more, so I asked for the URL.

Sure enough there it was right on their front page. Originate in all other states – licensing not required!

When I read the details I was amazed at how they are doing this.

They are paying the originator as a 1099 contract processor on the loan.

I know as an originator that sounds good. The ability to make loans in all states right now with out going through licensing, compliance, continuing education, back ground checks, etc.

But take a minute a think it through – according to RESPA, HUD, and every state that requires licensing and / or has lending laws on the books fees must be reasonable.

Let me ask the question this way; If you were an auditor from HUD or any state agency would you consider it a reasonable fee for a processor to be $3,500 of a $4,000 total fee?

Would you consider that a fair fee for a mortgage originator who does the lions share of the work?

I feel pretty confident that your answers are No to the first question and Yes to the second question.

This falls into the same category as paying loan officers as 1099 contractors or paying an LLC to avoid income taxes. Is it legal? No. Are companies doing it? Yes.

If you are a professional in this business and you are planing on being around for the long haul. Participating in these business practices will only guarantee a quick and painful end to your business.

It will only take one unhappy employee to blow the whistle on these practices and then everyone involved will in it knee deep.

If you have questions about being paid with a 1099 instead of as a W-2 employee see the first post on this topic.

I always appreciate subscribers and welcome comments and questions.

For more mortgage net branch information visit: NetOriginator.com

This is a very important topic that many net branch companies do not want to address.

Q. Can you work for a mortgage net branch company and be paid all or part of your income as a 1099 contractor?

(There are many companies telling prospective branch managers that this is OK – legal – and that everyone at the branch can be paid by 1099.)

A. WRONG!

Many companies are also paying loan officers and managers as 1099 contractors on FHA and VA (HUD) loans.

This is VERY WRONG!

Let review the 2nd issue – Originating HUD (FHA/VA) loan and being paid by 1099.

Read this summary memo from HUD regarding an audit to determine if independent contractors are being use to originate HUD loans.

Summary Link

It is absolutely clear that this is an illegal practice.

Now let’s address the more general practice of paying branches and loan officers as 1099 contractors. Many people think that it’s OK if you are not originating HUD loans.

The defining source for this is the Internal Revenue Service.

Many state are silent on this issue, and even if they allow it the federal government does not.

The IRS has a form called SS8 it is a 20 question form to determine if an individual qualifies for 1099 contractor status. No loan officer has ever qualified for 1099 independent status.

Here is another link to the IRS that covers this question in detail.
Topic 762 – Independent Contractor vs. Employee
To determine whether a worker is an independent contractor or an employee under common law, you must examine the relationship between the worker and the business. All evidence of control and independence in this relationship should be considered. The facts that provide this evidence fall into three categories – Behavioral Control, Financial Control, and the Type of Relationship itself.

If the company requires you to use specific forms, requires you to use their vendors – appraisers, title companies, investors, etc., if must put your loans through their company, if you work under their license, you are not an independent contractor you are a W-2 employee.

If you are working as a 1099 loan originator you could be subject to large fines from the IRS.

Does the company I represent pay people as 1099 contractors? Absolutely not!

As you consider a net branch company to work with make sure you are picking a company that is in compliance with the rules and regulations we all have to follow.

Even if you are not conducting your business this way if your company is and they get caught you will be left out in the rain with everyone else in that company.

I always appreciate subscribers and welcome comments and questions.

For more mortgage net branch information visit:
NetOriginator.com