A relatively small company started a little less than two years ago is aiming to grow aggressively while stressing technology-driven efficiencies and upfront disclosure to consumers.
President John Lee calls BluFi Mortgage, Carlsbad, Calif.—which he said has been in operation about a year and a half—a “true call center mortgage company.” Its LOs are noncommissioned hourly employees that are paid overtime, he said. The company stresses what it said is an “assurance policy” for consumers that ensures everything is “upfront and in writing” before loans close. It also strives to offer competitive rates.
At the time Lee spoke to ON for this article BluFi had been active in Washington, Hawaii and California, and planned to add about 20 more states in the next several months.
Like many, challenges BluFi faces include the need to build and maintain net worth and warehouse financing, and “the licensing is, of course, an issue” when it comes to adding states, Lee said. But he added that the company is meeting these challenges and has, for example, hired a compliance manager to stay on top of the process and that the company has a strong training emphasis.
Interestingly, while many have stressed the need for experience and knowledge when it comes to meeting the latest state licensing and related testing requirements, Lee sees opportunities for new recruits as well. He stresses the benefits of training an employee who is essentially a tabula rasa and noting that, with relatively fewer loan products in the market today than there have been historically, “it’s easier to train, particularly with our paperless process.” He noted that training is not restricted to LOs, but also extends to operations and support staff. “Training is important on a regular basis. We have to continue to make sure we continue to maintain it even though we’re growing.”
While the market contains a narrower range of loans today, Lee thinks some nonconforming products will eventually make a cautious return, among them stated income. “It will come back,” Lee said of the stated-income loan. “It is very needed for business owners.”
However, he noted he would restrict SI to maximum 60% loan-to-value ratios and minimum 740 FICO credit scores. He said he does not see SI’s return happening short term, given continuing fears about nonconforming loan types that mean even a product he sees as less risky than stated income, such as superjumbo, persists.
Another prediction Lee makes is that technology-driven companies like his will gain momentum.
“I do see more companies like us as retail evolves in this new Internet age.” However, Lee said the business is still necessarily “people-intensive,” given that mortgages are typically the largest loans borrowers will ever get.
However, when it comes to the traditional model of LOs seeing each of their clients in person, Lee said he believes “those days are gone.” LOs can now in some cases sit in their cubicles and use computers to, for example, review a pay stub electronically. He said he believes borrowers increasingly appreciate the convenience.
He acknowledged common mortgage technology challenges, such as what tends to be a preference for purchase borrowers, particularly first-time homebuyers, for face-to-face contact. Videoconferencing is something the company is looking at to address that, he said, also noting that he believes websites like Realtor.com and Zillow are driving more purchase business toward the Web.
Lee also discussed the challenge involved in what is still a somewhat limited ability to go “paperless.” The FHA, for example, still is evolving in this area. But despite such challenges, he said BluFi has been able to bring the office to the point where no printed loan files are passed around the office.
