Many mortgage brokerage companies are banding together to form confederations or franchises rather than face the harsh home-lending market alone.

Mortgage Tech Group, Islandia, N.Y., won't open its franchising network until Aug. 15, but it has already received at least 50 phone calls from interested parties, according to a company official.

"Just as in real estate the days of the mom-and-pop office is gone, so too are the days of the mom-and-pop brokerage office," said Albert W. Nagy, owner of Renet Financial Loans for Homes, a Homosassa Springs, Fla., franchise of Renet Financial Corp., Orlando.

Lenders and brokers say many brokerage companies are going to join these groups to avoid having to close their doors.

The National Association of Mortgage Brokers has no exact figures, but Michael J. Hoogendyk, executive vice president, said m6rtgage brokers were cutting back hard on staff and overhead. One Arizona brokerage outfit, for example, now has 25 employees, down from about 150 last December.

But brokers are hopeful that franchises and consortiums will help them survive the current lending crisis.

Donald Henig, president of Island Mortgage Network Inc., which is forming Mortgage Tech Group, said higher interest rates and lower loan production volume would drive many brokers out of business this year.

But he said joining a franchise network could act like "a healthy vitamin," providing better prices and bargaining power with lenders who buy loans from brokers. He said that joining a franchise could also reduce costs.

Franchises like Mortgage Tech Group charge up-front and yearly fees. Part of the money goes toward advertising and marketing campaigns.

Amcor Network, a new franchise operation based in Melville, N.Y., expects to have at least five brokerage firms buy its franchises within the next two weeks.

"It is very tough to compete as a smaller entity," Amcor chief executive David A. Olchek said of the mortgage brokering industry. He predicted brokers would continue to form consortiums and franchises in order to compete effectively.

First Mortgage Network, Plantation, Fla., is a variation on the franchise. It offers a common processing operation for brokers in exchange for membership and service fees.

Its president, Stephen I. Bloom, said his membership organization provides the economies of scale that many brokers need to remain open.

Self-Defense

Mortgage brokers are banding together in an effort to survive

Mortgage Tech Group

A franchise formed by Island Mortgage Network Inc., Islandia, N.Y.:

* Expects to have 1,000 outlets in 3 years.

* Charges a $5,000 fee and an incentive-based percentage of volume,

Amcor Network

A franchise formed by

Mortgage Key Corp.,

Melville, N.Y.:

* Expects to have 40 to 50 outlets in New York within a year.

* Charges a $10,000 fee and 8% of yearly gross profits.

First Mortgage Network

A membership organization, based in Plantation, Fla.:

* Expects to have 150 members, originating $750 million in loans, within 12 months.

* Charges $250 per month, plus $175 for each document preparation or underwriting.

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