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Community banks generally don't want to take the interest rate risk if a borrower wants a 30-year, fixed-rate jumbo, says Ron Haynie.
Community banks generally don't want to take the interest rate risk if a borrower wants a 30-year, fixed-rate jumbo, says Ron Haynie.

Outsourcer to Buy Jumbo Loans from Small Banks Wary of Rate Risk

JUN 11, 2014 5:05pm ET
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There are only so many jumbo mortgages that community banks are willing to put on their books. LenderLive Network is positioning itself to buy the ones they don't want to hold.

The Denver outsourcer is expanding its correspondent lending channel by offering to buy jumbo loans from members of the Independent Community Bankers of America. LenderLive will buy fixed- and adjustable-rate jumbos with loan balances of up to $2 million.

Since last year, the average 30-year fixed rate on jumbo loans has been lower than that on comparable government-backed mortgages, an anomaly reflecting banks' strong appetite for loans in their portfolios.

But community banks generally don't want to take the interest rate risk if a borrower wants a 30-year, fixed-rate jumbo, says Ron Haynie, executive vice president of the ICBA's mortgage unit.

Working with LenderLive provides a community bank with more options so their customers don't have to go to a competitor.

"We have gotten a lot of inquiries" about the jumbo product, Haynie says.

LenderLive, which also provides fulfillment, settlement and document services, entered into an affinity relationship with ICBA four years ago. It launched the correspondent lending channel in July 2013. 

The ICBA has partnered with LenderLive because it has several outlets to sell loans and retain the servicing. It won't sell the loans to banks that compete with ICBA members.

"Until now, community banks had to work with large aggregators if they wanted to serve customers who required a mortgage loan above $417,000," said Robert Kallio, senior vice president of ICBA Mortgage Solutions, in a press release. "We are pleased to offer a product that will meet these customers' needs while protecting these valuable relationships."

LenderLive was founded in 1999 to provide loan fulfillment services. It entered the servicing business in 2008. It provides subservicing for banks and credit unions.

It also provides servicing for nonperforming loans that are "typically highly distressed," says David Vida, president of LenderLive's correspondent lending and mortgage servicing divisions.

Today, the company services 20,000 loans. About 70% is conventional subservicing and the other 30% is nonperforming loans. LenderLive would not provide data on how many loans it has purchased via its correspondent channel. But Vida says ICBA is the "primary focus" on the correspondent side.

LenderLive is planning to expand its correspondent lending offerings, which already includes Federal Housing Administration-insured loans. The next rollout will be Department of Veterans Affairs guaranteed home loans.

Related:

Midsize Banks Hold More Mortgages Despite Rate Risk

LenderLive's Document Unit Now Called GuardianDocs

Ginnie Approves LenderLive as MBS Issuer

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