How to Start a Mortgage Processing Company

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The way that you go about starting a mortgage processing business varies by the state in which you'll be operating the business in. Most states, however, do require the company to obtain a mortgage license. There are several steps involved in obtaining a license to operate a mortgage processing company.

Instructions

1. Contact the mortgage licensing office for your state. This is usually the same office that issues and regulates real estate business licenses. This office will provide you with the application you need to submit to apply for a mortgage license and a list of required documents you will need to provide for your application to be processed. The application fee for obtaining your mortgage license varies by the state but can run from $1,000 to $2,000. This fee is typically nonrefundable, so be sure that you have everything in order before submitting your application.

2. Get your financial affairs in order. Some states pull a credit report and ask you for a list of assets before you can start a mortgage processing business. Pull your credit report and check it for any negative or inaccurate items. If there are negative items showing on your credit, clear them up by disputing the inaccurate information or making payment arrangements with creditors. Also, be sure that your bank statements or brokerage account statements show that you have sufficient capital to start the business. Again, it is the requirement of some states that you have a certain amount of money to fund the start of the business.

3. Choose a location to run your business. It can take 30-90 days to process the application for your mortgage processing license. Use this time wisely by finding out if you can run the business for your home or if you need to find a business location. The same office you contacted in Step 1 will be able to give you this information. Some states allow you to run the business from your home, while others do not allow home-based mortgage processing businesses. Work with a commercial realtor to find office space (if you can't or don't want to run it from your home office).

4. Incorporate your business. There are some states that require mortgage businesses to be incorporated. Find an attorney or an accountant that can help walk you through the process of incorporating your mortgage processing business. Even if your state does not require incorporation, a professional can help you determine if it's financially beneficial to incorporate the business.

5. Create a business plan. Before you start hiring employees or originating mortgage loans, it's important to develop a business plan. A business plan allows you to create a guide you can follow to make sure that you have enough money and will generate enough revenue to cover the costs of running the business including office rent, computer equipment and software, payroll, telephone, Internet and credit reporting fees.

   As part of your business planning, be sure to include marketing plans and initiatives. A marketing plan allows you to create a guide to finding and attracting clients, which is where the revenue will be generated from. This may include a plan for aligning your company with referral sources such as real estate agents or directly from the consumers by doing direct mailings, placing ads in publications and other direct advertising methods.

References

• Start a Mortgage Business