RE/MAX’s Motto Mortgage Up And Operating In 38 States

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Ever since actual property franchising powerhouse RE/MAX determined to use the corporate’s experience to the supply of dwelling loans, its Motto Mortgage enterprise has been capitalizing on its standing as the one nationwide franchisor within the mortgage dealer channel.

Launched in October 2016, Motto Mortgage has signed a mean of 1 new franchise proprietor per week since then. With greater than 265 franchises bought in 41 states in rather less than 5 years, Motto Mortgage is now closing in on having a presence in all 50 states.

As soon as a franchise is bought, Motto Mortgage helps franchisees navigate the licensing course of and the a number of steps wanted to get their places of work open, and at the moment about 560 mortgage officers work out of the 164 Motto Mortgage franchises up and operating in 38 states. The corporate is on monitor to have 200 franchises open by the tip of the 12 months.

Having helped 10,000 homebuyers and householders discover the suitable lender in 2020 and originating $2.4 billion in loans, the corporate initiatives the brokers in its community will do roughly double that quantity this 12 months — between $4 billion and $5 billion.

Open Motto Mortgage franchises

Supply: RE/MAX Holdings Inc. regulatory filings

Motto Mortgage promotes itself as a turnkey resolution — a “mortgage brokerage-in-a-box” — obtainable not solely to RE/MAX associates, however to any actual property dealer or entrepreneur who’s searching for assist with know-how, compliance, coaching and advertising.

Ward Morrison | Credit score: LinkedIn

“In the event that they needed to exit and rent a technologist, a advertising director, a compliance director … it could value a whole lot of 1000’s of {dollars}” to get a enterprise up and operating, Ward Morrison, president of Motto Franchising LLC, advised Inman. “For the worth of 1 worker, they’re getting 4.”

From the patron’s standpoint, Morison stated Motto Mortgage stands out from the lending arms of many different actual property brokerages by offering entry to a community of about dozen wholesale lenders who supply competing charges and merchandise.

Morrison estimates about 80 p.c of loans originated by Motto Mortgage franchisees are funded by one in every of 5 wholesalers: United Wholesale Mortgage (UWM), Caliber Residence Loans, Plaza Residence Mortgage, Finance of America, and Rocket Mortgage (previously Quicken Loans).

Motto Mortgage brokers aren’t exempt from UWM’s controversial determination to cease doing enterprise with any dealer that sends mortgage purposes to rivals Rocket Mortgage or Fairway Unbiased Mortgage.

“We tried to offer steering, however the selection is as much as them,” Morrison stated of “that unlucky state of affairs,” requiring mortgage brokers to decide on between UWM or Rocket Mortgage.

One other key to Motto Mortgage’s fast development is that, as franchise homeowners develop their enterprise, their month-to-month franchise payment stays the identical, creating the potential for “limitless income,” Morrison stated.

After paying an preliminary $30,000 franchise payment (half of which might be financed for twenty-four months at zero curiosity), Motto Mortgage expenses a month-to-month payment that steadily will increase to a cap of $4,800 month.

“We get a set payment that’s the identical no matter loans closed,” Morrison stated. As a former mortgage dealer himself, he stated, “It’s been a deal with to see [Motto Mortgage franchisees] improve their mortgage quantity.”

It may be an excellent alternative for an actual property dealer to enhance the fee income earned by brokers — 71 p.c of Motto Mortgage franchise gross sales so far have been to actual property corporations. Whereas most franchisees are RE/MAX brokers (58 p.c), one other 13 p.c are both impartial brokerages, or affiliated with one other model. The remaining gross sales are to entrepreneurs, traders or homeowners of associated companies like title insurers.

Since most Motto Mortgage franchises are owned by actual property brokers, it is sensible that the Motto community “is closely purchase-loan targeted,” Morrison stated. Even throughout final 12 months’s refi increase, buy loans accounted for 60 p.c of Motto franchisees’ originations, Morrison stated, in comparison with about 35 p.c for the mortgage business as a complete.

If rates of interest begin to rise, the refinancing increase is predicted to tail off, however Motto Mortgage brokers ought to nonetheless have a gentle stream of buy mortgage clients, if the previous is an indicator.

Though particular person dealer networks like C2 Monetary Corp and NEXA Mortgage LLC enable mortgage officers to arrange department places of work, Motto Mortgage is a “true community of independently owned franchises,” Morrison stated. An entrepreneur who invests in a Motto Mortgage franchise and efficiently grows the enterprise might be rewarded with a “saleable asset” after they’re able to money out, he stated.

Motto Mortgage has made Entrepreneur journal’s Franchise 500 for 2 years in a row, touchdown 147th general on this 12 months’s record, up from 395th final 12 months, and capturing a primary within the “Miscellaneous Monetary Providers” class.

Final 12 months’s acquisition of wemlo, a fintech supplier of mortgage mortgage processing companies, by father or mother firm RE/MAX Holdings Inc., beefed up Motto Mortgage’s know-how proposition.

Since every mortgage creates its personal workload, wemlo customers do pay a payment of $695 to $1,195 per mortgage, relying on the kind of mortgage. That payment might be picked up by the franchisee and constructed into their bills and pricing, or paid for up entrance by the patron.

Wemlo is at the moment licensed to serve mortgage brokers and mortgage originators in 31 states, and Morrison stated the corporate is working to be in as most of the remaining 19 states as attainable by year-end.

Though there are many corporations that present mortgage processing companies, not all of them are courting smaller originators.

“Numerous suppliers don’t wish to invoice mom-and-pops,” Morrison stated. “We perceive the challenges of the channel, and the facility of getting checks from particular person brokers.”

Wemlo may function “an incredible introduction” to Motto Mortgage, Morrison stated. “In the event that they’re a mom-and-pop brokerage, possibly they’ll convert to Motto.”

Though the mortgage dealer origination channel virtually disappeared through the monetary disaster and Nice Recession of 2007-09, it’s loved a renaissance as shoppers and lenders rediscover its advantages.

“We’re bullish on the dealer channel, and the selection that it offers to the patron,” Morrison stated. “We really feel just like the sky is the restrict within the dealer channel, and Motto Mortgage gives a good way to get into it legally, and compliantly.”

The mortgage enterprise accounts for a small, however rising, share of Re/max’s income. In its most up-to-date quarterly report back to traders, RE/MAX Holdings stated its mortgage section generated $4.73 million in income through the first half of the 12 months, up 87 p.c from the identical interval a 12 months in the past. The mortgage section additionally generated a $1.88 million loss in adjusted earnings earlier than curiosity, tax, depreciation and amortization (EBITDA), up from $1.32 million within the first half of 2020.

The corporate additionally reported paying near $13 million to amass Wemlo Inc. RE/MAX paid $6.1 million money, plus $3.3 million in Class A standard inventory, and one other $6.7 million in equity-based compensation “associated to 2 workers who departed.”

E mail Matt Carter

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