How to start a mortgage lending company?

Question

I am Neerav. I am a software engineer and run a software services company. I live in Bay Area. Most of my friends are software engineers.

I have realized (but have not proved quantitatively) that giving a mortgage to software developers is less risky because they are in super high demand. This demand is only expected to increase in future. This means that in theory, it's possible to give them a lower rate for their primary home.

What I don't know is how this works out in real life. How do I start a mortgage lending business? What are the licensing and capital requirements? How do I make sure that if I provide a loan to a software developer at a particular rate, Fannie Mae / Freddie Mac will buy it?

Thanks in advance!

Mike Burkett · Answer

@Neerav Mehta You are correct.  Fannie/Freddie do not buy jumbo loans.  They do buy the vast majority of all mortgage loans below jumbo.  If you want to originate and sell jumbo loans, there is an investor market that buys those loans, aggregates them, then pools them into securitized bonds.  It is a well developed and complicated market.  If you want to become a mortgage company, you do need to be licensed nationally and in the state where you live (not all states require you to be licensed).  Most of those national licensing requirements can be found on the NMLS website.  National MultiState Licensing System.

David Robinson · Answer

@Neerav Mehta I would suggest connecting with an underwriter, and they can give you great insights on how loans are setup to be sold off to fannie and freddie. I dont know much about starting a mortgage company but I did stay at hokiday inn express last night (old commercial bad joke), and wikk be glad to give you any insights on the loan ofdice and broker side.  Feel free to reach out and we can connect.