Our Ability Experience- we pioneered the concept of branching. Compensation- when it comes down to the "real deal" our revenue split is the fairest in the business. Support- there is no "renting a license" with BranchPower. We give you personalized service throughout the relationship. Programs- from A-Z, conventional to sub-prime, we offer the products and programs that will make your deals happen. Technology- through our state-of-the-art technology group we give our branches the tools they need to close the deal efficiently and expeditiously.

Your Advantage Ownership - don't just build something for someone else. Help build your future. We offer our manager the opportunity to be owners, as well!

MORTGAGE REPORT
INDUSTRY FOCUS

Net-Branching - Taking the Step
by Glenn Wallace

Some form or other of net-branching has been around for a long time now. I remember back in 1992 when I formed my first net-branch, I didn't even realize that was what I was doing when I was doing it! However, when you take a mortgage broker or top loan officer that really knows how to originate and match him up with a solid back office that is also a mortgage banker then a true net-branch is born.

It was Adam Smith in his "Wealth of Nations" back in 1776 that first put forth the "Law of comparative advantage". This law states that countries should focus of producing goods that they produce best and trade for the other goods and services that they may need. Therefore, everyone is maximizing efficiencies and global trade and economy can flourish. The "law of comparative advantage" is alive and well and taking shape in the form of the net-branch concept.

Originators often underestimate the time, energy, expense and responsibility that the rest of the mortgage process involves. Many say, "I have the net-worth, I can get a warehouse line, I can be a mortgage banker." Well, there is a lot more to being a mortgage banker than a warehouse line. As a banker you will want to process and underwrite, both an expense as well as added accountability. Bankers also need to deal with an entirely different level of compliance. As you close loans in your warehouse line they need to be stipped, delivered, and funded. This is a process that requires a post-closing department. Mortgage bankers are also required to perform Quality Control on their files, issue HMDA reports and 1098's, maintain E & O insurance, hold state and agency audits, and perform annual re-certifications with each of their investors. All of these tasks and responsibilities require labor, technology, time, and money. Unfortunately, even after I explain the trials and tribulations of being a mortgage banker to the "top gun" some just have to try it. It is like telling your child that the stove is hot but they have to experience it for themselves. Most that have taken that direction have called me to say that I was right and have joined me as one of my branches. Why? Because I do all those banker functions that the originator has no expertise in, yet allows him to enjoy all the benefits of being a mortgage banker.

Let's review the benefits of being a net-branch:

• You are a banker without the back office.
• You get correspondent or direct FHLMC or FNMA pricing.
• You're yield-spreads are undisclosed.
• You have access to multitudes of investors.
• You can close loans in numerous states.
• You should be a Direct-endorsed HUD lender.
• You run your own operation including personnel, processing and the bottom-line.
• You can enjoy health, dental, 401(K), disability and other benefits large employers can provide including stock options.
• And there are more...

So, you are a top loan officer that is not happy with your current employer. You are getting a 50/50 split off of some padded rate sheet, underwriting is taking two weeks, and you can't underwrite government loans. You are thinking about becoming a netbranch of one of the ten you see advertised each month in the industry trade papers and magazines. Who are you going to chose? Here are some questions you should ask:

• How big is their back-office?
• Where are they licensed?
• Do they possess a full HUD eagle?
• What is the revenue split? Is it pricing right from the investor? Does it include the full SRP?
• Do they supply training?
• What processing system do they use? How technologically advanced are they?
• Do they have DU or LP?
• How often will you get paid? These are some basic questions that should be answered before making a move as a net-branch.

NetBranching: What's the fuss?
Compliance is the key
By Glenn J. Wallace

Recently, I was speaking at a mortgage banking conference and two loan officers approached me and asked, "What is all the fuss about netbranching? What's this HUD letter 00-15 that I hear all about? Why do companies say they are bankers when all they do is broker? Can a company really offer 100% commissions?" I said," Slow down, those are a lot of questions; do you have half-an hour?" They assured me that they were seriously considering several companies to join as a branch with most of them pitching things that sounded too good to be true. They wanted the real scoop, and, since I have been opening branches for years and was speaking on the topic, I seemed to be a credible source.

First, what's all the fuss about? Why are some states so tough on netbranching or even consider it illegal as does New York, and other quite lenient? Well, each state gives its banking departments different mandates and, therefore, they all have idiosyncratic views on most major issues. States out west take a very liberal stance when it comes to net-branching, however, this policy is consistent with their state licensing requirements. True netbranching involves the "renting of a license" by a licensed entity to an unlicensed entity. As a rule, the more difficult it is to become a license mortgage banker in a state, the tougher the stance on net branching or in the case of New York, being considered illegal. And, the reason is simple. New York is a huge marketplace with millions of consumers financing or refinancing houses, condos, co-ops, vacation homes, investments properties, etc. The New York State Banking Department is charged with protecting those consumers from predatory lending and fraud. One way they do this is by having very stringent licensing requirements to become a licensed mortgage banker. In addition to net-worth requirements and a warehouse line, the licensing review process can take up to two years! If net-branching were allowed in New York then unscrupulous individuals could circumvent the state's scrutiny by hiding under the license of the branching company. People that could not get licenses on their own or wish to wait the lengthy review process could enjoy all the benefits of the parent company, which is already licensed. These benefits include: nondisclosures of yield spread premiums, closing in your name, and depending on the company: multi-state licensing and FHA lending capability. These are significant advantages and place powerful tools in the hands of the loan originator. HUD shares New York's views on net-branching and since HUD also has strict requirements to be a supervised or non-supervised lender (as well as a six-month review process), it is concerned about anyone obfuscating the licensing process. Consequently, HUD put out Letter 00-15 to try to clarify the dos and don'ts of branching. HUD clearly states that all branches staff are required to be W-2 employees and that the expenses of the branch need to be paid by the company not the employee. HUD clearly does not have a problem with a branch manager's compensation being tied to the profitability of the branch, however, HUD requires that four basic rules be followed: 1) the company has to be responsible for all operating expenses instead of the branch manager; 2) the branch manager cannot control a company bank account to manage branch revenue and expenses; 3) the branch manager cannot be liable for any losses of the branch; 4) the branch manager cannot be asked to invest or "front" money to the company to work there.

As far as most "net-branch" companies acting as brokers, rather than bankers, that relates to compliance and economics. Being a lender has many advantages. However, with those advantages comes accountability. It is the lender that is responsible for most of the disclosures needed to be signed by the borrower and it is the lender that is ultimately responsible for predatory and high-cost loans, even if they came in through wholesale. It is much easier to have branches act as brokers than bankers. Most of these net-branch companies do not have the expertise or the resources to really monitor their branches' activities, so they broker and leave it to the investor to worry about it. They also do not have the backoffice support necessary to be a lender. A true lender has underwriters, closers and post-closers on staff in addition to a secondary marketing department. These functions cost money and most net-branch companies, again, do not have the expertise, willingness, or capital to perform these lender functions.

And, lastly, have you ever heard of a mortgage company that was a non-profit organization? So, when you hear offers of 100% commissions- BEWARE! What the Net-branch Company is doing is marking up the ratesheet to guarantee their profit margin. Also, they will often hit the branch with higher than usual fees. The company has to make money, as well. How they do so is the question? Do they give you a loaded rate sheet that kills deals because the pricing is too high and quote some outrageous commission splits that are too good to be true? Or are they up -front and work off a fair compensation model with everything disclosed? These are questions you need to have answered before joining any net-branch company.

Now that I completely confused these two loan officers, they asked, "So, Mr. Wallace what makes your company so special?" I replied that American Mortgage Express' BranchPower program is designed to be 100% compliant with HUD, RESPA as well as all 50 states' banking departments, most notably New York state, where we do significant business. At American Mortgage Express, we have been in business as a mortgage banker since 1994. We are well capitalized and act in a lender capacity 95% of the time. Even though we close and bank conventional, FHA, Alt-A, and sub-prime product, we recognize that there are some deals that are best brokering and that's what we do. By acting as a lender on most of our transactions, we give our branches control! We have underwriters on staff that deliver 24-hour turnaround and closers that follow suit. We have a secondary marketing department that provides our borrowers great rates and our branches unmatched yield-spreads. And, as a lender, those yield-spread premiums are undisclosed on the HUD-l. We also offer our branches a diverse product line that spans the full credit spectrum. And, if by some unique chance we do not have a product, we then broker the loan to a lender that does. Also, our profit share arrangements with branch managers are very fair and favor those branches that achieve higher volume numbers. Lastly, I have been running branches since E978, for Citibank, the Dime, and others. I have built a program that benefits from those years of experience. My team is focused just on servicing the branch network. From compliance, product questions, learning the ins-and-outs of FHA, to state licensing and closing those hard to close loans, BranchPower stands above the rest.

"Wow!" they said, and the two loan officers walked away with allot more to think about and a branch manager application package for BranchPower. For me it was just another successful conference.

To Go Physical or Virtual;
Either Way, Manage Your Own Destiny
By Glenn Wallace

IN these tumultuous times many loan officers have been forced into truly analyzing their personal business plan. Banks and large mortgage companies once thought of as impervious to the swings of the market and safe havens for steady employment are folding like decks of cards. Their smaller brothers, mid-size mortgage companies, who have not anticipated the downturn, have been caught with fixed overhead that they cannot support and have subsequently downsized or folded. And even the "Mom and Pop" shop has felt the crunch. With their loan sources drying up and little overhead to reduce, they are just faced with the reality that it is time to do something else while this market goes through its changes. So, what is a loan officer to do? Where should they go? Where is it safe? What is the best opportunity? This article looks to explore some of the options on the table for loan officers that still believe they can make it in the mortgage business.

I was there when the first "net-branch" was opened. It was in New York, back in 1995, with a company called Ivy Mortgage. Things have changed a lot since then including the fact that net-branching is illegal in the state of New York. Back then the concept of a single or group of loan officers leaving a big company and going on their own was a courageous act. There was a lot of security working for a big name bank and the only option was starting something completely on their own. All the aspects of running a mortgage company including: licensing, getting investors, accounting/payroll, processing, marketing, and sales were your responsibility. The net-branch was a novel alternative that offered loan officers the opportunity to focus on what they did best - write loans. The corporate entity did all the back office, nonrevenue producing chores. The concept was sound and built on Adam Smith's Theory of Comparative Advantage, "you do what you do best and we do what we do best and together we produce more than we could if we did it all on our own." I guess the model worked since back in 1995 there were four or so of us in the Mortgage Originator advertising and you can see the numbers in the business today. Of course there have been many variations on the theme: firms that just "rent a license" (illegal) where the branch simply forwards a piece of the revenue to the licensee for the use of its license. There is no support or back office but the cost is very inexpensive; until you are closed down. Then there are the flat fee deals, the 100% commissions, the basis point arrangements, and the percentage splits: Trying to give our branches the benefit of all the choices, we at Nationwide will entertain and offer each of the aforementioned compensation agreements (except to rent a license!)

But, you have all heard the wonderful benefits of netbranching before. It all sounds so good. However, is a netbranch right for everyone? Why do so many net-branches fail? One of the first realizations of a loan officer making the transition to branch manager is that being "the boss" is not so easy. It is lonely at the top. And if you do not have the right support from your back office it becomes very lonely! You soon realize that your old manager wasn't as big a jerk as you thought. Many new branches fail right out of the gate because the manager, who was the top producer stops originating and focuses his attention on everything else: building a sales team, finding and equipping an office, and simply trying to manage a business. Soon he finds out that the loan officers he hired or brought with him aren't very good and he has become a nursemaid. There are no originations and no money! The sooner he realizes he has to keep producing the sooner he becomes profitable. At Nationwide, we provide the manager with much of the support and tools he needs to make it through this transition and beyond. This includes guidance on keeping the production going!

After a while running a branch many managers look back and say "Was it worth it? Yes, I like the autonomy but am I really making more money?" In many cases the answer is NO! You get tired of originating, but that is what you do best! Many managers hire a slew of loan officers only to find out they can't produce. They buy leads for them, offer draws, provide training and, at the end of the day, production is barely more than what you did on your own!

This is why we at Nationwide have developed the Nationwide Direct program. This program is an option for loan officers looking for their independence and their ability to earn big dollars, but without the headaches of managing an office. There are other programs that are similar, all focusing on the ability of the key producer to sell! What is important about any program you choose is: the support. Are you provided with the tools you need to succeed? Will you have to chase your money? We learned from others and developed Nationwide Direct to meet the needs of the independent or "virtual" loan officer. Equipped with the latest technologies, our Nationwide Direct sales staff can write and process loans, check their personal P&L's, and more, from anywhere on the globe. They don't have to worry about the downtime of getting a branch licensed, the headaches of calculating commissions, someone answering the phones, etc. All they focus on is: selling. So, if there is not a huge opportunity to bring on a group of high-producers, or you do not need a physical presence, then the Nationwide Direct program may be the answer.

Either way branch or virtual, doing it the way you want, is the way to go!

Nuts & Bolts

Time in Business
Nationwide Equities was founded in 1999 in Copiague, NY and has been a well recognized leader in the mortgage brokerage community since inception.

Branch Philosophy
There are many branch networks that have a "rent a license" approach to branch development. Not at Nationwide Equities. We look for Branches that are looking to make their last move; managers that are concerned about compliance and welcome a helping-hand from their corporate leadership. At Nationwide Equities, we are not looking to open a Branch on every street corner. We are looking to attract the best, and, in return, give the best! Best in service! Best in price! Best in support!

Investor Relationships
To provide its Branches and loan officers with the broadest choice of mortgage programs, Nationwide Equities has established relationships with all the top lenders including: Chase, SunWest, and Wells Fargo. For those niche products, American Mortgage Express, Greenpoint, Fremont, Option One, and thirty others are available.

Who decides where to go with the loan?
You do. The decision where to take the loan rests solely with the Branch Manager or Loan Officer.

ORIGINATING, PROCESSING, UNDERWRITING AND CLOSING LOANS

Licensed States
As previously discussed, Nationwide Equities is currently banker licensed in NJ, FL, NY, PA, and CT.

Reverse Mortgage
Nationwide Equities examined all aspects of the reverse mortgage and its cost structure to identify multiple opportunities to enhance benefits and reduce cost beyond just simply reducing the margin. As a result, we now offer variable and fixed rate HECMs within our suite of HECM products. Adjustable options are available based on various financial market indexes plus a margin. The HECM fixed provides the assurance of a fixed rate for the life of the loan.

FHA & VA
Nationwide Equities is currently pending its supervised lending authority by HUD giving it the ability to originate government loans.

Subprime
With the economic picture constantly in flux many borrowers have become credit challenged. Nationwide Equities has relationships with multiple lenders that provide products to meet these customer's needs. With our extensive product menu, there should never be a loan that you can't do!

Niche Products
Today, many borrowers have special circumstances that put them outside "the box" of a conventional FNMA loan. Nationwide Equities has products for foreign nationals, no-income / no-asset, stated income, no ratio, and more! We even offer "hard-money" loans on a banked basis.

Product Desk
Have a loan situation that is unique or is beyond your scope? Just call the product desk and ask the "Desk" is manned with a seasoned professional that will educate you on product alternatives, help you structure your deal, or find a home for that hard-to-place loan.

Origination Software
Our Branches and loan officers are provided Encompass. This LOS is widely used by most mortgage professionals and seamlessly interfaces with LP, DU and various credit agencies.

Processing
Since Nationwide Equities accepts only experienced Branches and loan officers, most loans are pretty well documented before submission. However, a full team of processors is available to follow-up on loans and to provide processing on loan officer files. We encourage our Branches to process their own loans and use corporate processing as a back-up.

Underwriting
Nationwide Equities provides its Branches and loan officer's access to LP, DU, CLUES (Countrywide), e-mits (IndyMac), right on their laptop! This technology not only streamlines the entire system, it puts the power of approval in your hands.

These technologies offer at least four advantages to you: First- They greatly reduce the time from application to approval. Second- Because of quick approval you can usually take the borrower off the market sooner, thereby reducing the tendency to shop rates. Third- These AU engines allow for the running of various financing scenarios to determine which combination of debt and income modification will allow the customer to qualify. Sometimes even $5 in reserves can make the difference between approval and declination. Fourth- AU allows you to stretch the ratios. We have seen 60% back end ratios get approval. This tool really gives you the edge.

Leads
While leads are generally the domain and arena of the Loan Officer, we have a number of quality lead sources from whom you may purchase leads at your discretion.

INCOME, COSTS & BENEFITS

Commissions
Nationwide Equities is offering one of the most aggressive revenue splits in the business, most of the gross revenue on the loans goes to the Branch. There are no marked-up rate sheets or house pricing. You get the rate quotes directly from the investor. The real price!!! The real revenue!!!

Equity Ownership
At Nationwide Equities we feel it is important that our Branch Managers get an opportunity to reap the rewards of their hard work. Therefore, in addition to enjoying the short-term gains of higher revenue splits, we offer our Managers the opportunity to own a piece of the company.

Benefits
As a Nationwide Equities employee you will have access to company health benefits provided through United Healthcare. In addition to medical insurance, Nationwide Equities will be offering Delta Dental, and our 401K plan.

We Look Forward to Working With You! Contact us with any additional questions.
E-mail: Info@nwecorp.com