Houston’s Envoy Mortgage is the latest independent mortgage banker to step into an area where the bigger banks are abandoning or cutting back correspondent lending.
The company has hired Dan Hastings as executive vice president and Todd Cheney as senior vice president to run the new operation, which will be headquartered in Monroe, La.
Both Hastings and Cheney each have more than 27 years of mortgage lending experience, most recently at Affiliated Mortgage Corp. where they ran its correspondent lending division. Hastings served as president and division manager of the correspondent division at Affiliated, while Cheney was senior vice president and chief operating officer.
Hastings said Envoy will be buying conforming and government loans, including loans guaranteed by the Veterans Administration and USDA Rural Development programs. It will be a nationwide buyer, but is currently active in 48 states.
The two had worked with Envoy’s top executives, CEO Rick Thompson and president and COO Pat Walden, in the early 1990s.
Hastings said because of the cutbacks in the channel, the time right now is good for a company like Envoy, which has a national retail operation and owns a servicing portfolio, to get into the space. Historically lenders have used the correspondent channel to significantly grow their mortgage servicing rights.
Those MSRs have even more value right now because of the high quality of today’s originations plus the low coupon which makes them less likely to refinance and stay on the books longer.
Wells Fargo ended the third quarter as the largest purchaser in the channel, but observers noted an increased number of bidders for whole loans.
Envoy has been looking to move into correspondent for a few years, Hastings noted.
Cheney echoed Hastings point, noting there are a lot of synergies with Envoy’s existing retail channel and a lot of opportunities to leverage the infrastructure the company has.
David Zugheri, Envoy’s executive vice president, added the correspondent business is underserved right now and “there is a middle part of the industry that is reconstituting itself” to fill the void created when the larger aggregators left.
As far back as 2008, he said Envoy had made a decision to be in the correspondent space and given the current economics of MSRs, it makes sense to take that step now.
There should be a six-month ramp up period before Envoy is able to start accepting locks.