Residential Magazine

Launch Your Independent Mortgage Broker Career

Know the steps to take when moving from the retail to wholesale channel

By Desmond Smith

It’s an extremely competitive time to be in the mortgage industry — and an even more exciting time for the wholesale lending channel. In 2020 and 2021, these businesses experienced tremendous growth and opportunity. With interest rates at record lows and homes becoming more important to consumers than ever before, the entire mortgage industry had its best years ever.

This year has proven to be vastly different. Refinances have drastically slowed as rates have risen, and pipelines are no longer bursting at the seams. This isn’t necessarily a bad thing, nor unexpected, as mortgage lending is a cyclical industry. Now is the time to reflect and ask yourself, what’s next?
The reality is, the things that most originators strive for — personal growth, building generational wealth and providing exceptional client experience — can be achieved. More specifically, these aspirations can be met by making the transition to the wholesale channel. Becoming an independent mortgage broker offers a multitude of benefits, including freedom, flexibility and unlimited earning potential. But the question many people ask is, “How do I make that transition?”
Although it may seem intimidating, opening or joining a brokerage is easier than it sounds, and there’s a whole network of resources and supporters out there to help make your move as easy as possible. And due to the changing environment of the mortgage industry, now is the time to get started.
A multitude of loan originators have already transitioned from retail to wholesale, moving from jobs as loan officers who work for a single lender to brokers who can shop multiple lenders on their client’s behalf. There’s no doubt this trend will continue throughout 2022 and 2023. To help get the ball rolling, let’s dive into exactly what you’ll need to do to join the wholesale channel as an independent mortgage broker.

Initial preparation

In the initial phase of the transition, there are a few things you’ll want to get in order right away. First, choose a business name and register it with the state or states in which you plan to do business.
Next, set up your business entity. There are several types to choose from, including a sole proprietorship, a limited liability company, a partnership and more. This will determine your tax eligibility and also will help you establish the processes for how your business will operate.
Lastly, open a business bank account. Whether it’s through a large national bank, a small community bank or a credit union, you’ll want to make sure you do your research in finding the best business or trust account.

Obtain licensing

As a mortgage broker, you must be registered with the Nationwide Multistate Licensing System and Registry (NMLS). This platform helps ensure you become a licensed and compliant mortgage broker who can validate your qualifications for potential clients and business partners.
As you transition to open your own broker shop, you’ll want to create your MU1 profile, which will allow you to set up your company profile in the NMLS. Once your profile is complete, you will receive an email with your company NMLS number.
You’ll then want to download a checklist of licensing requirements from the NMLS. You’ll need to determine whether your state has a brick-and-mortar requirement for office locations, and if your state has an individual licensing requirement. Of note, most states average 30 days from application submission to approval, and some states take a little longer given the strong demand to transition away from retail to wholesale lending.
You’ll need to set up your company’s compliance plan. This will help you prepare for a state audit. For your first year of business, it’s highly recommended that you outsource this task.

Next steps

Choosing the right digital tools can make or break your company. While you’re going through the licensing process, take time to research things such as loan origination software, customer relationship management platforms and point-of-sale technology. Talk to others in the wholesale lending industry to determine which tools will be the best fit for your business.
As an independent mortgage broker, you’ll have the freedom to shop around with multiple lenders to ensure you can present clients with the best options for their unique financial situations. It’s suggested that you find at least three lenders that can collectively handle the types of loans you’ll be focusing on.
For example, find lenders that specialize in conventional mortgages, U.S. Department of Veterans Affairs loans, Federal Housing Administration renovation loans, low-credit and nonagency options, etc. Make sure you have all your bases covered so you can help every borrower who walks in your door or finds you online.

Smooth transition

Mortgage brokers have been through a lot over the years, but they are resilient and will continue to grow along with the wholesale channel. The time to dominate as an independent mortgage broker is now, and you don’t have to make the transition alone.
The shift from retail to wholesale can be nothing short of daunting, but it’s important to remember that support is offered by lenders and professional organizations (such as the Association of Independent Mortgage Experts), which will make the transition smooth and simple while providing you with the tools and resources needed to succeed.
Anyone in retail who is thinking about becoming a mortgage broker should take advantage of the benefits today. It’s that simple. Mortgage brokers have better product options — and more flexibility to be their own boss and control their business. With more time and independence, they can put all their focus on doing what matters most: helping borrowers achieve their dream of homeownership. ●


  • Desmond Smith

    Desmond P. Smith is chief growth officer at United Wholesale Mortgage. In this position, Smith focuses on innovative ways to advance the independent mortgage broker channel. Smith brings three decades of knowledge and experience to the table from his time spent at the Federal Housing Administration, Wells Fargo, JPMorgan Chase, Citi, Capital One Home Loans and Fannie Mae. He has been recognized for creating high-performance cultures, empowering teams and transforming businesses.

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