The changing origination landscape is making it more advantageous for midsize lenders to retain servicing rights, according to a panel at this week’s SourceMedia Mortgage Servicing Conference in Dallas.
Bob Gundel, senior hedge manager of Compass Analytics, said that regulatory changes and the departure of large mortgage aggregators from the production business have created a thinning market for third-party originators.
“If you're an originating TPO you have fewer outlets to sell your loans,” Gundel said. “This creates a favorable environment for regional banks and mortgage banks.”
Lenders that don’t adjust to the current climate are in danger of going out of business, he warned, but there is an opportunity for lenders to retain their servicing rights and increase business.
“It's making it very difficult to sell loans in this market on a servicing released basis,” said Tad Hensley, director of secondary marketing at Ameripro Funding, which recently began retaining the servicing for a portion of its origination portfolio.
Adding to the positive momentum toward retained servicing is that new mortgages are high quality loans originated under the clear guidelines of basic product types. “This is some great looking paper out there,” Gundel said.
In addition, the remaining correspondent aggregators are overwhelmed by the volume of loans being submitted to them. Turn times on warehouse lines of credit are in some cases double what they used to be and aggregators are reducing the prices they’ll pay for mortgage servicing rights to help stem the flow of business, Gundel said. (For complete coverage see the Monday paper edition of National Mortgage News.)
