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After seeing its mortgage workplace rely shrink this yr for the primary time ever, actual property franchising large RE/MAX is bouncing again with the opening of recent Motto Mortgage workplaces in Arizona, South Carolina and Michigan.
Since launching in October 2016, Motto Mortgage had loved years of regular development, with the franchisors’ open workplace rely hitting 246 final yr because it inched towards a long-term aim of getting 1,000 places nationwide.
This yr, Motto Mortgage’s open workplace rely has contracted a bit every quarter, as elevated mortgage charges slowed new franchise gross sales and put some current franchises out of enterprise.
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The 234 Motto Mortgage workplaces open nationwide as of Sept. 30 represented a 5 % decline from final yr’s peak, guardian firm RE/MAX Holdings disclosed in reporting third-quarter earnings.
Erik Carlson
“We’re feeling the effects as the number of open Motto offices is declining slightly for the first time ever,” RE/MAX CEO Erik Carlson mentioned on the corporate’s Nov. 1 earnings name. “Franchise sales have slowed and a few existing franchises have terminated due to their financial position, lack of transaction activity or not being connected to the real estate transaction.”
Motto Mortgage workplace rely contracts
Supply: RE/MAX Holdings Inc. earnings experiences.
Motto Mortgage doesn’t make loans itself however offers know-how, coaching and advertising instruments for mortgage brokers who work with wholesale lenders like UWM, the nation’s largest mortgage lender. Every Motto Mortgage franchise is independently owned, operated and licensed.
Franchisees signal seven-year agreements instantly with Motto Franchising, and 2024 is the primary full yr the corporate has had workplaces come up for renewal. RE/MAX additionally offers third-party mortgage processing providers to mortgage brokers via one other subsidiary, wemlo, which it acquired in 2020.
“While Motto has seen some of those terminations increase during the past year as the macro economy changes, we do believe we’ll be able to start growing that open office count again soon,” Carlson mentioned.
Carlson mentioned September was the most effective month of Motto franchise gross sales since March of 2023 and that wemlo additionally had its finest month of the yr for mortgage submissions.
“Despite this recent bright spot, continued elevated mortgage rates have made it a tough time to be in the mortgage business,” Carlson mentioned.
RE/MAX’s mortgage enterprise within the crimson
Supply: RE/MAX Holdings Inc. earnings experiences.
Whereas RE/MAX’s Motto Mortgage and wemlo companies generated $14 million in income final yr, the mortgage phase produced a $6.9 million adjusted EBITDA loss (earnings earlier than curiosity, taxes, depreciation and amortization)
In the course of the first 9 months of 2024, RE/MAX’s mortgage phase generated $11.05 million in income, up 6 % from $10.44 million throughout the identical interval a yr in the past, the corporate mentioned in its most up-to-date quarterly report to traders.
By Sept. 30, RE/MAX’s mortgage phase generated a $3.96 million adjusted EBITDA loss, a 28 % enchancment from the $5.54 million adjusted loss seen through the first 9 months of 2023.
Rising mortgage charges made 2023 a troublesome yr for lenders. By the top of the yr, 56 Motto workplaces have been receiving short-term monetary reduction and weren’t being billed or had charges deferred, RE/MAX disclosed in its most up-to-date annual report to traders. That’s down from 58 workplaces receiving reduction on the finish of 2022, however up from 31 workplaces in 2021.
“There’s a lot of headwinds on the mortgage side,” RE/MAX Chief Monetary Officer Karri Callahan acknowledged on the corporate’s Q3 earnings name.
Karri Callahan
“I think the thing that’s really exciting is we’re still seeing interest” from potential mortgage franchisees, Callahan mentioned. “While there’s still a little bit of mud in our boots from a collections perspective on the mortgage side, I think operationally there’s some cautious optimism that we’re moving in the right direction.”
Most Motto franchisees are actual property brokers
“Other Real Estate” consists of nationwide franchisees aside from RE/MAX, native brokerages and groups from different manufacturers. Supply: RE/MAX 2023 annual report to traders.
Traditionally, near three-quarters (73 %) of Motto franchise gross sales have been made to actual property brokerages that need to get into mortgage lending, and simply over half (51 %) have been affiliated with RE/MAX.
However final yr, brokerages affiliated with RE/MAX accounted for less than 18 % of Motto Mortgage franchise gross sales.
That’s the case with the latest Motto Mortgage workplace openings, together with Motto Mortgage Limitless in Pinetop, Arizona, led by mortgage trade veteran Deb Gaustad.
Gaustad’s 4 many years of mortgage origination expertise consists of stints with Flagstar Financial institution, Motion Mortgage and Fairway Unbiased Mortgage Corp.
Deb Gaustad
“Motto Mortgage Limitless offers an advantageous alternative to the traditional mortgage bankers currently operating in Pinetop,” Gaustad mentioned in a press release. “We provide the scope, scale and support of a large retail lender, while offering the flexibility, autonomy and exceptional service of a local mortgage broker that knows how to navigate the intricacies of the home buying process in your market.”
Motto Mortgage Limitless will serve all Arizona markets, the corporate introduced Monday.
Final month Motto Mortgage introduced the opening of a brand new workplace in Greenville, South Carolina — Motto Mortgage Group Options — serving all markets within the state and North Carolina, Georgia and Florida.
Shatoya Cobb
Proprietor Shatoya Cobb‘s 5 years of trade expertise consists of positions at U.S. Mortgage Lenders LLC and Southwest Funding.
Mortgage originators Yolonda Lowe and Leon Paz convey practically a decade of mixed trade expertise, Motto Mortgage mentioned.
“I like to think of myself as a personal home loan shopper scouring mortgage loan options to find one that helps my clients reach their homeownership goals,” Paz mentioned, in a press release. “Being fluent in English and Spanish, I am uniquely positioned to support my borrowers and am dedicated to finding the most competitive loan program for each client’s unique financial situation.”
In August, Motto Mortgage introduced the opening of a brand new workplace in Marquette, Michigan, Motto Mortgage Specific, serving all markets all through the state.
Jackie Menhennick
Motto Mortgage Specific Vice President and operations supervisor Jackie Menhennick has greater than 30 years of mortgage lending and administration expertise, Motto Mortgage mentioned.
In April, Motto Mortgage introduced two authentic Motto franchise house owners — Motto Mortgage Prosperity and Motto Mortgage Supreme — had renewed their licenses.
This yr, Motto has additionally introduced the opening of Motto Mortgage Royal and Motto Mortage INVICTUS in Florida; Motto Mortgage Sail Dwelling in New Hampshire; and Motto Mortgage Premier Execs in North Dakota.
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