With all of the regulatory and compliance changes that have come into play in recent years, the effect has been to put every originator pretty much on the same playing field.
But “at the end of the day, the transaction happens locally and so we have relationships with real estate agents and homebuilders and title companies and appraisers,” he notes, continuing that there are plenty of professionals who are part of a real estate transaction and Willow Bend through its relationships services those people.
With the documentation requirements of the past couple of years making it harder to close loans, it makes it that much more important for Schrank and Willow Bend to have a strong relationship with their clients to explain the process and give them an idea of what to expect as well as keep them informed as to what is happening.
The service aspect is what helps him to stand out in what has become a commoditized mortgage origination business. “We do everything we can to service people, because our name is on the deal. At the end of the day, a big part of our referral business comes from past clients. We go to great lengths to make each transaction as pleasant of an experience [as possible],” says Schrank, and to secure the referral.
He has been in the mortgage business for over 20 years. Schrank was with another company for a brief period in 1993. Later that same year he co-founded Willow Bend Mortgage.
It started as a small broker shop with three employees. Now he is executive vice president of what is now a mortgage banking company which has approximately 115 employees, three offices in the Dallas/Fort Worth Metroplex plus nine others around Texas. Willow Bend became a mortgage banker in 1999.
Being a managing producer is time consuming, especially now with all the changes in the business. But ensuring compliance needs to be done and Schrank says he makes the time for it.
Today there are a number of department heads at Willow Bend who are able to assist in the decision process, he points out.
Most of his clients are conforming borrowers. The average loan amount is $230,000.
Schrank’s 2013 volume was $73 million from 244 units. His 2012 volume, when he ranked 105th on the updated Origination News Top 200 Originator List, was $81 million.
Prior to June, his business was 30% refinance. But after rates started to rise, Schrank’s origination mix shifted to more than 90% purchase.
“We’ve always tried to focus on purchase business, because being in this for 20 years, we’ve seen a few economic cycles,” he states, adding there is not much originators can do about interest rates but there is something they can do regarding creating relationships.
Schrank has two assistants and a processor and all three are very good, allowing him to handle his responsibilities both as a manager and an originator.
He takes all applications and that goes back to the service/relationship development part of his business. He wants to create, develop and cultivate relationships through the loan cycle.
Towards this end, his preferred method of client communication is a telephone call as opposed to email.
“I like email. Email is a good form of communications, especially late at night and on the weekends. But as far as I am concerned, a phone call works a lot better to communicate what you are actually trying to get across.
“You can’t really deliver emotions on email. So I try to make phone calls whenever I can, just to bolster that relationship throughout the process,” he says.
Virtually all of its business is referral-based, whether B2B or B2C. The company does not advertise, has not gotten into leads or online marketing and it does not do direct mail.
Schrank and his colleagues make an effort to help others build their businesses. It is his belief that by helping people they are more likely to help you.
This is the basis of his business philosophy and it has been since he first became an originator. In this way, one can build a successful enterprise based on relationships, without having to worry about the economy and where interest rates are heading.
Willow Bend has been getting ready to comply with the qualified mortgage rule and ability-to-repay for several months. It has had little effect on most of its clients.
But for the borrowers who are constructing homes (the company does both construction and construction-to-permanent financing), the new rules has meant “quite an education process” for all involved.
For example, the company has warned people building a new home not to be too extravagant on the upgrades because the additional costs could push the debt-to-income ratio above the qualified mortgage safe harbor threshold.
Construction and construction-to-permanent financing make up about 5% of its volume.
Jumbo mortgage rates have been lower than conforming rates for the past couple of months and that has had an impact on the market, Schrank notes. There have been cases where the borrower who is slightly over the conforming loan limit has split the loan with the excess going into a second.
Now with the jumbo rates so low, the borrower can do as well or better with a single loan.
Willow Bend itself is not a Fannie Mae or Freddie Mac seller/servicer, but it sells to aggregators which in turn sell to the government-sponsored enterprises.
When the market was shaken up when several of the large aggregators left the correspondent channel, Willow Bend was not affected because it has long-term relationships with the firms that purchase its loans.
Another key is being available when his relationship partners are working. The real estate business is not a Monday-to-Friday, nine-to-five job. So he gets calls at night and on weekends.
Answering calls during those times is a simple act but goes a long way towards providing that service level and building the relationships Schrank wants to cultivate.