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Lender Sustainability Needed To Ensure Future Survival

The companies below are looking to create a sustainable business, by growing their production channels and in some cases, their servicing platforms. But as past experience shows, making the wrong call can result in business failure.

Peter Norden, chief executive of Real Estate Mortgage Network, River Edge, N.J., said the company is working on “aggressively” expanding its loan production operations. It is projecting $4.5 billion in volume in 2012, up from approximately $3 billion in 2011.

“Most of that increase in volume is coming from both an aggressive hiring spree of sales people (for the retail channel) and account executives on the wholesale side, as well as the merger of numerous mortgage companies who do not have the capital to survive the current environment and are looking for strategic transactions whereby they can still participate in an earnings stream,” he said.

Not only is REMN recruiting sales staff, Norden said his company is “being recruited pretty aggressively by a number of top sales people throughout the country.”

Meanwhile, the company is building up its mortgage servicing rights portfolio as well. In early December, REMN had a portfolio of slightly under $2 billion. But in 24 months it looks to have over $5 billion.

The company plans to retain much of the servicing rights its origination platform generates going forward, Norden said. This is a result of the large aggregators either leaving the business, or because they are dropping what they are willing to pay for MSRs to a level that does not make economic sense for REMN to continue to sell to them.

New capital requirements for banks have resulted in this pull back or pull out from the third-party channels. The result, he said, has dropped prices “to levels that I have never seen in the business—and I have been in this business for 34 years. It is almost to the point where you’re giving away the servicing rights for free.”

Given the low coupon and tighter underwriting of the loans being produced today, it is creating such quality servicing rights that those who have the capital are looking to keep them if they are not going to be getting a higher price for selling those MSRs.

But he is concerned that there are companies out there that do not have the sufficient amount of liquidity needed to retain MSRs. “I believe a lot of originators that are out there that do not have a tremendous amount of capital are starting to retain servicing rights.

“But they really don’t realize the extent of the advances (to secondary market investors) that are required to be made on the 14th of the month, every month, on every single loan where a payment has not been made yet, as well as all of the taxes and insurance that also have not been paid due to delinquencies,” he said. For example, for that $2 billion portfolio, REMN had to advance $6.5 million in cash to the investors on Nov. 14.

Foundation Financial Group, Jacksonville, Fla., is coming off a second consecutive year where it has seen a 14% year-over-year increase in volume, said its chief executive Mark Boyer. It is looking to “springboard” off that in 2012.

The success of its first five retail branches launched in August is leading Foundation to expand that initiative this year. Boyer said the company is looking to add 20 more retail branches by the end of the year.

“We are trying to get that brand presence across the country. Right now, we’re really strongly held in the east coast and want to spread that across the midwest through out 2012,” he said.

On the call center front, after adding two in 2011, there are no plans to open more. But, he said, they will add personnel to existing call centers.

Foundation is already a Fannie Mae/Freddie Mac seller/servicer and is seeking approval with Ginnie Mae.

Like other originators, Foundation is putting more focus into GSE production, Boyer said.

“There are a lot of changes in the servicing world going on right now, which makes it an interesting market.

“It is really a better opportunity for people who are just getting in, because we can set things up with a lot of the new changes. That is necessary with the changes in the correspondent market,” he noted.

With Bank of America exiting the correspondent channel, it affected all players. Turn times right now are so poor, at levels Boyer said he has never seen.

That filters into the warehouse side and places capacity constraints on lenders.

“You can’t say that outlet is always going to be there,” he said.

United Wholesale Mortgage of Birmingham, Mich., is taking a different approach to growth in 2012. The company is pushing its jumbo mortgage product, The Big and Easy.

It is available with loan amounts up to $2.5 million and loan-to-value ratio’s up to 80%.

Other options include a 30-year fixed, 15-year fixed, 10-year ARM and also a 5-year ARM. This program accepts FICO scores as low as 720.

Eligible property types for The Big and Easy include primary residences, second homes, condominiums, planned unit developments and double units.

UWM president Mat Ishbia said the market landscape for the jumbo product has been limited the last few years, and what few banks are doing them are originating short duration adjustable rate mortgages for their own portfolio.

The longer-term jumbo offerings from UWM are what set it apart, he said. The programs are for the “best borrowers in the country.

“We think that The Big and Easy is going to be a huge program for us, not only from the rates perspective, but also the program guidelines and ability to close,” Ishbia continued. “It is very clear guidelines, very simple for our brokers to follow. We underwrite and close in house, and handled fast.

“We’re closing those in less than two weeks,” and UWM doesn’t even offer locks longer than 30 days on the product.

UWM is Growing Originations and Adding Staff

UWM expects two-thirds jump in production.  View the article as covered in MortgageDaily.com; January 23, 2012.

United Wholesale Mortgage Experiences Explosive Growth and Product Expansion

BIRMINGHAM, Mich., January 17, 2012 – United Wholesale Mortgage (UWM), a national wholesale mortgage lender operating in 47 states, announced that in 2011 it significantly expanded its business in all functional areas, hired top executives, increased its workforce, implemented new technology and launched several new products.  UWM plans to continue with its aggressive growth strategy as they remain focused on originating high quality loans in excess of $3.5 billion in 2012 and upwards of $8 billion by 2014.

“2011 was a phenomenal year for UWM in terms of our growth and the impressive talent we acquired,” said Mat Ishbia, president of UWM.  “Everything that we do revolves around providing top-notch service to our brokers and correspondents.  Brokers can utilize our industry-leading technology, which helps them gain more market share in their territory, and in turn significantly increases our volume.  We have earned a reputation for offering the highest quality of customer service, exceptional products and the ease to close loans quickly.  As we move into 2012, we are looking to take our business to the next level by offering a full spectrum of mortgage products and warehouse lines to our Broker network.”

Notable UWM products released in 2011 include:

  • Introduced a rare $2.5 million dollar jumbo loan product, dubbed “The Big & Easy”
  • Among one of the first lenders to implement and roll out the changes to HARP 2.0
  • Launched the Pay Advantage loan – a Conventional product up to 97% LTV with no monthly M.I.
  • One of the few Lenders to offer Conventional Split M.I. products up to 97% LTV
  • Instant M.I. Certification on Conventional loans
  • The Patriot Plus VA IRRL

Notable UWM accomplishments in 2011 include:

  • Implemented EQ (Easy Qualifier), a proprietary product engine, which allows Brokers to qualify and price a borrower on up to 10 products at once
  • Named Mortgage Technology Magazine’s Top 25 Tech-Savvy Lenders
  • Completely paperless process that embraces e-consent for borrowers
  • Hired hundreds of sales, operations and executive management staff
  • Launched an outside sales force to complement our inside division

Company officials at UWM say they plan to double its number of employees and move to a new 100,000 square foot facility in the next 12 months.


About United Wholesale Mortgage

Headquartered in Birmingham, Michigan, United Wholesale Mortgage underwrites and provides closing documentation for residential mortgage loans originated by mortgage Brokers, banks, credit unions and correspondents. UWM provides unparalleled service with its deep understanding of the mortgage process using its talented team of account executives, underwriters, closers and funders, who have years of experience with intricate knowledge in wholesale. UWM’s positive teamwork and dedication to exceptional customer service has resulted in continued success and growth that has spawned expansion.  For more information, visit www.uwm.com or call 800-981-8898.

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