However, he says that brokers have no "exit" strategy. Because it is such a customer and service-driven business, they are difficult to sell.

Under his plan, mortgage brokers would continue to own and enjoy their profits of their businesses. But Vanguard members would pool their money to a few "preferred" lenders who would then give them better deals on rates. The below-market spread would flow back to Vanguard, building an asset. The company might go public at some time.

Knight needs to raise $7.2 million in capital to launch his company. He has lined up about 35 "Founding Partners" who own brokerage firms in 20 states to participate. The partners currently make between $30 million and $240 million in loans each year. Knight also has raised $644,000 in seed money.

Knight says there area about 220,000 mortgage brokers in the country, and about 25% of those could qualify to join Vanguard, which is built on models used for national law and CPA firms.To qualify, a company needs to make at least million in loans per year; can't focus primarily on refinancing, as that business could disappear with rising rates; can't specialize in high-interest sub-loans; must have close ties to the local home building, developers and Realtors; and must prove they meet ethical standards.