More Companies Find Momentum in Wholesale

While the broker business is gaining participants, will it add people at the same rapid pace of a few years ago. Credit: ©alesl - Fotolia.com.

There is a growing num-ber of people who operate third party lending channels commenting that this is now the time to either start up or expand one’s presence in the single loan purchase business. One of the reasons is that there are more sellers emerging as loan officers step back from bigger players and become independent operators again.
Hallmark Home Mortgage, Fort Wayne, Ind., has formally launched USA Wholesale Lending, with the new unit licensed in, or soon to be licensed in, 20 states.
USA Wholesale Lending was designed to complement the retail efforts of Hallmark Home Mortgage, which was founded in 2006 by CEO Deborah Sturges. Sturges had been an executive at Waterfield Mortgage and when the company was sold that year she formed Hallmark Home Mortgage to capitalize on her former employer’s exit.
Howard Hoyt, whom she describes as a “founding father” of Waterfield’s wholesale lending channel, has been appointed president of the new unit. He joins USA Wholesale Lending from Fairway Independent Mortgage Corp., where he served as divisional vice president for wholesale lending.
The wholesale channel will be treated as an extension of the retail business, he said, and that is because it is much more cost effective. “Obviously a little tighter on the price point as far as margins are concerned, but nonetheless still a great space to get into at this point in time and create an additional revenue stream for Hallmark,” Hoyt said.
Sturges added the housing market is strengthening and as larger players have exited the TPO space, it has created a more level playing field for the company.
The wholesale channel will acquire loans from brokers, smaller banks and credit unions. There are no plans to purchase closed loans at this point in time, but Hoyt does foresee a possible opportunity down the road in what is referred to as the mini-correspondent business.
“The goal of the channel will be controlled, sustainable growth over the next 36 months. We are expanding our geographic coverage to 32 states and are building a national team of about 30 account executives and regional account managers. The objective is to generate closed loan production of a billion dollars annually,” Hoyt notes. “The way we’ll get there is by helping our clients to compete, to maximize revenues and to capitalize on opportunities in their markets.”
Sturges added that USA Wholesale’s operations are centralized in Fort Wayne, but we are leveraging talent from many places via technology for the benefit of our clients.
“Core functions like information technology, operations and accounting are here in our headquarters, but underwriting talent is available everywhere and we intend to tap those resources for their local market knowledge.”
First Guaranty Mortgage Corp., McLean, Va., wants to be ready for a growing community of originators selling loans servicing released. Said CEO Andrew Peters, the company is looking to move from being known as a boutique lender to being one who can meet all of kinds of borrower’s loan needs.
First Guaranty is placing its wholesale channel and its correspondent flow purchase channel under a single executive to help accomplish this. Jeffrey Gibson will take on the new position of managing director, TPO Flow; until now he was assistant vice president, correspondent division manager.
The correspondent flow platform is a very robust channel under Gibson’s leadership for the past 18 months, Peters said. The two businesses are similar in nature. It is the same clientele for each, and for varying reasons someone who has a warehouse line elects not to close in its own name and broker the loan instead.
Wholesale and correspondent flow, rather than moving in opposite directions, should have been moving in the same direction together and this move helps to accomplish that, Peters declared.
“Our take is that the TPO/broker side of the business is going to be growing exponentially over the next two-to-three years. We feel with the refinance business slowing down a little bit, a lot of the loan officers who are sitting pretty right now at banks where they are getting leads and doing well, when those leads start to slow down, we feel a lot of those loan officers are going to be stepping back into the more independent model,” Peters said. One of the reasons is they want to maintain their current compensation levels.
So there are more and more independent shops opening each month and even some of the banks are giving their loan officers the opportunity to broker files out. “Nobody wants to leave income on the table,” he said, noting there are companies with lines that are brokering loans because they don’t want to put it on their facility (for a variety of reasons).
Wholesale is becoming a competitive business again and will continue to grow, said Peters.