LenderCity, an online real estate resource from the Fidelity Mortgage Group, completed plans to sell franchises and compete with major banks. Under the franchise model, mortgage brokers can own and operate a branch independently and maintain control of their business. They would also receive administrative support, lead generation and the brand of LenderCity. Wells Fargo (WFC), Bank of America (BAC), and JPMorgan Chase (JPM) originated more than $861 billion in mortgages for 2010 and combined for more than half of the market share. Gregg Harris founded LenderCity in 1997 and is the current CEO. Originally pegged as the online presence of Fidelity, LenderCity recently rebranded to become more of a resource for mortgage shoppers. "I see a growing trend for smaller independent mortgage brokerage offices," Harris said. "Recent regulatory changes in the industry that restrict a loan officer’s income are making it more conducive for them to go into business for themselves." The regulatory changes Harris refers to is the recent loan officer compensation rule from the Federal Reserve. The Fed effectively ended the practice of paying originators more when a borrower accepts a higher interest rate mortgage, known as the yield spread premium. The rule was written to prevent borrowers from being steered into higher-cost mortgage products than the lender requires. The rule also ends the practice of mortgage originators receiving payments directly from the borrower and the lender simultaneously. "The franchise model allows them to benefit from being part of a larger organization while maintaining complete control over their business," Harris said. LenderCity plans to open up to 20 franchises this year and another 40 in 2012. Write to Jon Prior. Follow him on Twitter @JonAPrior.