The tremendous growth in the mortgage business has driven large mortgage companies towards an expansion drive. These companies are usually huge conglomerates with nationwide presence who would like to increase their reach by taking their services into previously untapped states, cities and countries. They do this by offering franchises to local mortgage companies or brokers of the area they would like to have their presence in. These companies which offer franchises are called mortgage net branch companies or mortgage net branch originators. The companies or brokers that operate as their franchises are called mortgage net branches. They have a mutually beneficial relation where the mortgage originators are able to expand their business into desired markets, get more business and earn goodwill. And the mortgage net branches get better exposure, increased profits as well as secured business.

Mortgage net branch originators invite prospective brokers and mortgage companies, through advertisements, to take up their franchisees. Ideally mortgage branch originators would like to establish as many net branches as possible, covering as many parts of the country as well as the world as possible. But this does not happen because net branches need to be selected carefully based upon certain requirements. These parameters are:-

• The prospective net branch should have the license to operate in the state where it proposes to do business.

• The broker or mortgage company which applies for the franchise should have at least two to three years of experience in the mortgage business.

• Certain companies require franchise applicants to appear for a written examination which would test their knowledge of the mortgage business.

• Brokers possessing good communication skills would be in an advantageous position.

Apart from the above, mortgage net branch companies require the applicants to fill up required application forms and make a payment for acquiring its brand name and goodwill. The mortgage net branch companies also have to follow the regulations set by Housing and Urban Development code while selecting net branches.

Another reason which makes the mortgage net branch companies exercise caution while selecting net branches comes from the fact that they are completely responsible for all activities of their net branches. This means that if a net branch violates any terms of business or law, then the mortgage originator would be held accountable and penalized, along with the branch guilty of misconduct.