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Real estate franchise giant RE/MAX is bouncing back from the first-ever decline in the number of mortgage offices this year with the opening of new Motto Mortgage offices in Arizona, South Carolina and Michigan.
Since its launch in October 2016, Motto Mortgage has experienced steady growth over the years, with the franchisor reaching 246 open offices last year and inching closer to its long-term goal of 1,000 stores nationwide. .
Motto Mortgage’s number of open offices has declined slightly each quarter this year as rising mortgage rates slowed sales of new franchises and some existing franchises went out of business.
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As of September 30, the number of Motto Mortgage offices open across the United States was 234, down 5% from last year’s peak, parent company RE/MAX Holdings revealed in its third quarter earnings report. There is.
eric carlson
“The number of open offices at Motto has decreased slightly for the first time in history, and we are feeling the impact,” RE/MAX CEO Eric Carlson said in an earnings conference on November 1. . “Franchise sales have been slow and several existing franchises have been terminated due to financial conditions, lack of transaction activity, and lack of connection to real estate transactions.”
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Source: RE/MAX Holdings Co., Ltd. financial report.
Motto Mortgage does not originate loans in-house, but provides technology, training and marketing tools to mortgage brokers who work with wholesale lenders like UWM, the nation’s largest mortgage lender. Each Motto Mortgage franchise is independently owned, operated and licensed.
Franchisees sign seven-year contracts directly with Motto Franchising, and 2024 will be the first full year the company will update its offices. RE/MAX also provides third-party loan processing services to mortgage brokers through another subsidiary, wemlo, which it acquired in 2020.
“While Motto has seen an increase in some layoffs over the past year due to macroeconomic changes, we are confident that we will soon be able to begin increasing the number of open offices again,” Carlson said.
Carlson said September was the best month for Motto franchise sales since March 2023, and wemlo’s loan applications were also the best month of the year.
“Despite recent positive signs, mortgage rates continue to rise, making the mortgage business challenging,” Carlson said.
RE/MAX’s mortgage loan business is in the red
Source: RE/MAX Holdings Co., Ltd. financial report.
RE/MAX’s Motto Mortgage and wemlo businesses generated $14 million in revenue last year, but the mortgage division lost $6.9 million in adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization).
In the first nine months of 2024, RE/MAX’s mortgage division generated revenue of $11.05 million, up 6% from $10.44 million in the year-ago period, according to the company’s latest quarterly report released to investors. increased.
Through September 30, RE/MAX’s mortgage division generated an adjusted EBITDA loss of $3.96 million, a 28% improvement from the adjusted loss of $5.54 million seen in the first nine months of 2023.
Rising mortgage rates have made 2023 a difficult year for lenders. RE/MAX disclosed to investors in its latest annual report that by the end of the year, 56 Motto offices had received short-term financial relief and no fees were charged or deferred. This is down from the 58 offices that received relief at the end of 2022, but up from 31 offices in 2021.
“There are a lot of headwinds on the mortgage side,” RE/MAX Chief Financial Officer Kari Callahan acknowledged during the company’s third-quarter earnings call.
carly callahan
“I think what’s really exciting is that there’s still interest from potential mortgage franchisees,” Callahan said. “There’s still a little muddy ground from a recovery perspective on the mortgage side, but I think there’s cautious optimism that we’re moving in the right direction operationally.”
Most of Motto’s franchisees are real estate agents
“Other Real Estate” includes national franchisees other than RE/MAX, local brokers, and other branded teams. Source: RE/MAX 2023 Annual Report for Investors.
To date, nearly three-quarters (73 percent) of Motto franchise sales have gone to real estate agents seeking mortgage financing, and just over half (51 percent) have been affiliated with RE/MAX.
But last year, RE/MAX’s brokerage firms accounted for just 18% of the Motto Mortgage franchise’s sales.
This is also true of recently opened Motto Mortgage offices, including Motto Mortgage Limitless in Pinetop, Arizona, led by mortgage industry veteran Deb Gaustad.
Mr. Gaustad’s 40 years of loan origination experience includes stints at Flagstar Bank, Movement Mortgage, and Fairway Independent Mortgage Corp.
Deb Gustad
“Motto Mortgage Limitless provides a favorable alternative to the traditional mortgage banks currently operating in Pinetop,” Gaustad said in a statement. “We offer the reach, scale, and support of a leading retail lender, but with the flexibility, autonomy, and flexibility of a local mortgage broker who knows how to navigate the complex home buying process in your market. We provide excellent service.”
Motto Mortgage Limitless will serve all Arizona markets, the company announced Monday.
Last month, Motto Mortgage announced the opening of a new office in Greenville, South Carolina, Motto Mortgage Community Solutions, serving that state and all markets in North Carolina, Georgia and Florida.
Chatoyah Cobb
Owner Shatoya Cobb’s five years of industry experience includes positions at US Mortgage Lenders LLC and Southwest Funding.
Loan originators Yolonda Rowe and Leon Paz bring nearly 10 years of combined industry experience, Motto Mortgage said.
“I consider myself a private mortgage buyer who seeks mortgage options to help my clients achieve their homeownership goals,” Paz said in a statement. “I am fluent in English and Spanish, which puts me in a unique position to support our borrowers, and I am dedicated to finding the most competitive loan program for each customer’s unique financial situation.”
In August, Motto Mortgage announced the opening of a new office in the Michigan market, Motto Mortgage Express, serving all markets in the state.
Jackie Menhennick
Motto Mortgage Express Vice President and Operations Manager Jackie Menhenich has more than 30 years of experience in mortgage lending and administration, Motto Mortgage said.
In April, Motto Mortgage announced that two former Motto franchise owners, Motto Mortgage Prosperity and Motto Mortgage Supreme, had renewed their licenses.
This year, Motto also announced the opening of Motto Mortgage Royal and Motto Mortage INVICTUS in Florida. Motto Mortgage New Hampshire Sail Homes. Motto Mortgage Premier Pros in North Dakota.
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