CrossCountry Mortgage executive discusses expansion
March 6, 2023 5:00 AM
Last year, his team of about 150 employees, churned out $850 million worth of originations. And this year, despite the headwinds, Dillenberg hopes to be "north of a billion."
Dillenberg's branches – those he owns and others he oversees – were previously under the LendUS umbrella.
The company was acquired by Ohio-based CrossCountry Mortgage in April 2022 after LendUS' CEO, Rob Hirt, "saw the writing on the wall" that the mortgage industry would be in for a tumultuous ride. "Though I'm not sure [Rob] expected it would be this bad," Dillenberg said.
Close to 800 employees transitioned from Alamo, California-based LendUS to CCM. And almost a year into being acquired, 600 employees from LendUS remain.
Dillenberg says that since the acquisition, he is turning his attention to
National Mortgage News spoke with Dillenberg about what benefits he sees from integrating with CCM, his outlook for the spring homebuying season and the trends he's watching.
Why did LendUS transition to CCM last year?
My partner Rob Hirt was the owner of LendUS and he saw the writing on the wall with the way the market was beginning to turn. He just felt like we needed to be in a bigger boat with more capital because if we weren't, our best people were going to get picked off by a company like CrossCountry and we would be left as a shell of a company. I think it was a very fortuitous move because CrossCountry has a significant balance sheet.
We came over as the largest division within CrossCountry and kept a fair amount of our autonomy and flexibility, so we could operate like we have been operating for the last 15 years with the same people, same underwriters and funders and then use the horsepower of CrossCountry with respect to all their back office operations, HR, accounting and marketing.
We came over as the largest division within CrossCountry and kept a fair amount of our autonomy and flexibility, so we could operate like we have been operating for the last 15 years with the same people, same underwriters and funders and then use the horsepower of CrossCountry with respect to all their back office operations, HR, accounting and marketing.
What did the integration into CCM entail?
I think there's always been a friendly rivalry between LendUS and CrossCountry. I'm not sure who reached out to who, but the conversation of us integrating started in February 2022. It was a long, drawn out process. The leadership team found out two weeks before the actual changeover day and we kept it quiet for about another week. Then we told our folks that 'hey, next Monday we're going to be CrossCountry.'
It was an acquisition and we rolled the whole company over to CrossCountry. My job was bringing my group, which was about 100 employees over. I think we're close to about 150 employees now.
It was obviously a little challenging at first, them trying to digest 800 of us in one fell swoop, but they did an amazing job. We're now fully integrated, growing and have continued to add people to our region. CrossCountry is very entrepreneurial.
It was an acquisition and we rolled the whole company over to CrossCountry. My job was bringing my group, which was about 100 employees over. I think we're close to about 150 employees now.
It was obviously a little challenging at first, them trying to digest 800 of us in one fell swoop, but they did an amazing job. We're now fully integrated, growing and have continued to add people to our region. CrossCountry is very entrepreneurial.
What is your team's origination volume? How many states do you guys cover?
My group, the 150, do business in all 50 states. Meanwhile, the overall division of 25 branches that I oversee are located in 10 different states. Last year, my group did $850 million. Our goal is definitely to be north of a billion this year. And back in 2021, it was $2.1 billion. It was definitely a big haircut last year, but we're bouncing back nicely.
You’ve mentioned that you’re bringing new branches onboard. Are there plans to continue expanding?
We recently brought on a group from Ventura, California and there was a small group from Temecula, California. I'm working on a couple more opportunities in Oklahoma and I'm trying to go to some of the areas where CrossCountry doesn't have a huge footprint, such as New Mexico, Missouri and Idaho.
I would say at minimum we're looking for branches that are still doing maybe $30 million a year in production. Obviously, I'd love to find branches that are doing $100 million to get more production.
I would say at minimum we're looking for branches that are still doing maybe $30 million a year in production. Obviously, I'd love to find branches that are doing $100 million to get more production.
What's your business strategy for this year?
I think for the next three to six months there's going to be a great opportunity for us to continue to recruit and grow and attract talent from companies that either aren't going to make it, are cutting it so thin that their operations are challenged, or aren't investing in marketing and growth.
We have a really strong balance sheet and we're still investing in people, infrastructure, lead generation components and social media components. This is going to allow us to attract like minded other branches that are forced out of their companies.
We have a really strong balance sheet and we're still investing in people, infrastructure, lead generation components and social media components. This is going to allow us to attract like minded other branches that are forced out of their companies.
What's your outlook for the spring home buying season? Will FHA premium reduction boost activity?
I'll start with the FHA. That's going to definitely open up more opportunities to make it a bit more attractive for people who are typically first-time buyers. Especially with Fannie Mae and Freddie Mac doing their LLPA adjustments . They've made it a little bit more challenging for some people, cost-wise and because of that FHA becomes more attractive.
I think the worst is behind us in terms of just where the industry was, where rates were. Inflation numbers will continue to get more in check. I think the big number drop will be in May. We'll see rates drop more significantly and hopefully get us back into the fives. I think at that point, you continue to see more activity, you'll start seeing some refi activity for the loans we did last year that are now maybe the opportune time to refinance. I do think 2023 will definitely be better than 2022. But I think 2024 will be more of a breakout year than 2023.
I think the worst is behind us in terms of just where the industry was, where rates were. Inflation numbers will continue to get more in check. I think the big number drop will be in May. We'll see rates drop more significantly and hopefully get us back into the fives. I think at that point, you continue to see more activity, you'll start seeing some refi activity for the loans we did last year that are now maybe the opportune time to refinance. I do think 2023 will definitely be better than 2022. But I think 2024 will be more of a breakout year than 2023.
What developments are you keeping your eye on this year?
It's really market-driven, in terms of what is really happening with inflation and the Fed. Are they going to ease up? Can we get people excited about homeownership again? How do we continue to get rid of the idiots that got into our business?
The stats peaked at like 600,000 originators at the end of 2021 and I want to say it's forecasted that about 250,000 will remain by the middle of this year. That will get rid of a lot of the call center guys and everybody that got in the business because anybody could have made money in 2020 and 2021.
So, keeping an eye on that and just making sure we're holding to our model in terms of the people we want to have as part of our culture and just watching the trends of where people are going. It's probably too saturated in California, so that's why I'm trying to get into markets outside of the state.
The stats peaked at like 600,000 originators at the end of 2021 and I want to say it's forecasted that about 250,000 will remain by the middle of this year. That will get rid of a lot of the call center guys and everybody that got in the business because anybody could have made money in 2020 and 2021.
So, keeping an eye on that and just making sure we're holding to our model in terms of the people we want to have as part of our culture and just watching the trends of where people are going. It's probably too saturated in California, so that's why I'm trying to get into markets outside of the state.
