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Rising rates may be wreaking havoc on the mortgage industry as a whole, but RE/MAX’s mortgage subsidiary Motto Mortgage has been named to a list of top “recession-proof” franchise opportunities and to a separate list of top franchise opportunities for Black entrepreneurs.
Franchise Business Review, which has ranked Motto Mortgage as a Top 200 Franchise for 4 years in a row, has now singled out the franchisor as a Top Recession-Proof Franchise based on an assessment of its potential to outperform competitors during challenging economic times.
Another publication, Black Enterprise, used Franchise Business Review data to put together a list of the Top 25 Franchises for Black Entrepreneurs, which highlights franchisors with the highest owner-satisfaction scores among Black franchise owners.
Kelly Jackson and Davina Arceneaux, co-owners of Motto Mortgage Home Services, said in a statement that as first-time entrepreneurs, they were attracted to the perks that came with joining the Motto network.
“When we opened Motto Mortgage Home Services, we received an immense amount of support from other Motto offices to help us navigate the industry and have consistently received ongoing education opportunities from the franchise headquarters’ team to give us the insight and tools to help us grow our business,” the co-owners said. “Plus, Motto Mortgage’s brand credibility and reputation gave us strong credentials to fall back on and allowed us to make a name for ourselves much faster than we would have if we went the independent business route.”
Many mortgage lenders have been downsizing as rising rates put an end to the pandemic-era refinancing boom. But as mortgage brokers who work with multiple lenders, Motto Mortgage franchisees may have an advantage as the industry pivots to serving homebuyers.
Not only do mortgage brokers often have deep local connections to real estate agents and homebuyers, but rate volatility makes homebuyers more likely to shop around for the best deal, according to Mat Ishbia, CEO of the nation’s biggest wholesale mortgage lender United Wholesale Mortgage (UWM).
UWM, which works exclusively with mortgage brokers, launched an aggressive pricing strategy in June to build market share, and it even operates a website BeAMortgageBroker.com that encourages retail loan officers and other entrepreneurs to become mortgage brokers.
Purchase loan volume expected to hold
Source: Fannie Mae Housing Forecast, September 2022
Even though rising interest rates have made homes less affordable and put a damper on sales, lenders are projected to finance more than three times as many home purchases as refinancings next year.
Forecasters at Fannie Mae expect refinancings will drop by 72.6 percent this year to $731 billion, and by another 33 percent next year to $490 billion.
While purchase lending has also cooled as rates have risen, rising home prices have mitigated some of the impact. Fannie Mae forecasters expect purchase loan dollar volume to fall by 10.2 percent this year to $1.706 trillion but shrink by only 1.5 percent next year to $1.681 trillion.
Lenders are already competing fiercely for those homebuyers. RE/MAX subsidiary Motto Franchising LLC says that as mortgage brokers, its Motto Mortgage franchisees give “the power of choice back to consumers,” by allowing them to shop for home loans offered by different lenders.
Motto Mortgage growth
Motto Franchising LLC doesn’t make loans but is a technology, compliance, training and marketing solution for mortgage brokers. The company provides its “mortgage brokerage-in-a-box” to RE/MAX affiliates or any real estate broker or entrepreneur. RE/MAX also provides mortgage loan processing services to mortgage brokers through another subsidiary wemlo.
After helping its franchisees open 60 new offices in 2021, Motto has announced the opening of 12 new franchises this year. The most recent office openings include:
- Motto Mortgage Future, San Ramon, California
- Motto Mortgage Titanium, St. Augustine, Florida
- Motto Mortgage North Group, Sarasota, Florida
- Motto Mortgage Action, Greenwood, South Carolina
- Motto Mortgage Top Tier, Omaha, Nebraska
A company spokesperson said there are now more than 200 Motto Mortgage offices in 39 states.
According to Franchise Business Review, the initial investment required to get a Motto Mortgage office off the ground ranges from $62,800 to $81,800. That includes the franchise fee, fixed assets, inventory, deposits, other fees and costs and the working capital required for the initial startup.
Motto Franchising CEO Ward Morrison said in a statement that the company’s business model, “not only creates a secondary business with revenue potential for current real estate brokerage firms, but also offers opportunities for mortgage professionals seeking to open their own businesses and independent investors interested in a financial services franchise.”