A partnership of 23 big-name real estate brokerages is about to strike a deal under which a national lender would buy loans originated by the realty companies.
The partnership Chicago-based Master Mortgage LP, is an outgrowth of a brokerage-industry roundtable that calls itself the Masterminds.
The group is on the verge of signing up a major national lender that will buy loans originated through mortgage banks owned by the brokerages and based in the their offices, according to Peter Hunt, a general partner of Master Mortgage.
Mr. Hunt, who is also the owner of Hunt Realty in Buffalo, N.Y., said he could not disclose the identity of the lender until a deal is complete.
Once the arrangement is up and running, Mr. Hunt expects it to generate between $20 million and $40 million in mortgages a month.
In the Works Since 1990
Across the country, more and more realty brokers and lenders are setting up arrangements, such as computerized loan origination systems and joint ventures, to provide mortgages to homebuyers at the point of sale.
Master Mortgage has been in the works since 1990. Besides Hunt Realty, some of the other partners are affiliated with DeWolfe New England, Lexington, Mass.; Sibcy Cline Realtors, Cincinnati; Jon Douglas Co., Beverly Hills, Calif.; and Long & Foster Realty, Fairfax, Va.
Fee Income to Be Shared
Participants in the partnership will share the fee income generated by originations, according to Mr. Hunt, The lender's product will be offered through mortgage banks owned and operated by the companies.
"From our perspective, having one central provider offering nationwide pricing will give us the flexibility to cut pricing if we want to gain market share or raise it to gain income," he said.
The consumer's interests will be protected, Mr. Hunt said, because mortgage units of the realty companies already offer rates and products from several different lenders.
|Item on the Menu'
The Master Mortgage product will just be one more item on the menu which the consumer will choose if he thinks its the best deal," he said.
However, one issue the limited partnership will have to up toe around is the distribution of profits. Should partners be paid according to the volume generated by their correspondent offices, it could be construed that they were being rewarded for steering' customers to the product, according to Mr. Hunt.
For now, most of the profits will be plowed back into the partnership. However, Mr. Hunt said, "we will make distributions."