Mortgage net branching is a business in which mortgage companies invite mortgage brokers and small mortgage companies as franchises in a bid for expansion. Companies that set up the syndicate are called mortgage originators. They pay their net branches by way of brokerages. The responsibility of net branches is to create mortgaging business for the originator company. Their work includes cross-checking, processing and underwriting loans. They also have to conduct risk analysis studies for the loans. For this job they get their payments by way of commission brokerages.
Brokerages are split up among the originator and the net branch. If the broker company is a proper company with an office, then the brokerage is split up on a 90-10 basis. That means the mortgage net branch gets to keep 90% of the commission while the originator takes 10%. In addition to this, the originator may charge a nominal amount per loan processed. Though this is the general split-up, it is not the norm, and originator companies may change the split according to their discretion. In fact, some companies even advertise that they allow their net branches to keep up to 100% of the commission. In such cases, net branches have to pay a fixed amount to the originator company per loan closed by it.
If the mortgage broker is an individual working from home, then there is a different manner in which the commission is split. In such cases, the broker receives a much lower amount of the commission, while the originator company keeps a higher amount. The split may be 70 to 10 percent. Additionally, there is a small fee per transaction that the originator company collects. The reason for a low commission to the broker working from home is that the originator company has to invest more machinery and goodwill in the transaction. Mortgage companies offer their brokers incentives apart from their earnings through brokerages. As an example, if a broker is able to close more than ten mortgages per month for the parent company, then the parent company may award added bonuses and commissions to the net branch.