Rate adds leading producers to expand P&L branch business

Chicago-based Rate is opening a profit and loss branch in the city's Elmhurst suburb, bringing in two former Fairway Independent Mortgage originators to helm the operation.

The new office "advances Rate's broader expansion of its profit-and-loss platform," the company's press release said.

Fairway's new Elmhurst branch is being headed up by Vito Roppo and Nick Ferrante, who have joined the company from Fairway as producing partnership branch managers. Together, they bring $155 million in production to Rate, the press release said.

The branch strengthens Rate's presence in this portion of the Chicagoland region, as Elmhurst straddles Cook and DuPage Counties.

"Vito and Nick are accomplished producers who have built a strong business in the western suburbs," said Jim Eboli, executive vice president and Midwest divisional manager at Rate, in the press release. "Adding leaders of their caliber is a major win for us."

P&L branches are considered by some to be another name for net branching, which had its heyday during the early 2000s industry boom. A net branch is a business arrangement in which a local branch manager runs a semi-autonomous profit-and-loss unit, operating under the license and back-office infrastructure of a larger parent mortgage company. The business model received scrutiny by state and federal regulators, leading to other names used to identify it, such as branch development.

But many of the large operators back then, including Carteret Mortgage and Allied Home Loans went out of business because of the housing bust. Allied's flame out was spectacular, with the company ordered to pay a $296 million False Claim Act judgement and former CEO and president Jim Hodge receiving a $25 million penalty by a jury.   

In a 2012 National Mortgage News opinion piece, Ari Karen noted that states were reviewing branch manager agreements at the time, specifically checking whether managers paid on a profit-and-loss basis were, in effect, operating illegal net branches.  

"The company has a historically strong presence in Chicago, along with the technology and support to help us move quickly and keep growing," Roppo said in the press release. "It felt like the best place to satisfy more homebuyers and close the most amount of loans."

"Our business is built from strong local relationships and a clear sense of how we want to operate," Ferrante added. "Rate gives producers room to make decisions and move quickly, and that fits how Vito and I work."