A growing Midwest retail/wholesale lender started at the peak of the crisis is finally coming into its own with a purchase-focused strategy that could prove to be a competitive edge.
“We are in the very final steps of the approval and we are confident we will be approved,” Sturges said in an interview, noting that it could open up a lot of opportunities for the company.
Before Hallmark and the recent industry downturn, Sturges worked for Waterfield Mortgage, a well-known Midwest lender that was eventually acquired by East Coast-based nonconforming lending giant American Home. Sturges said she chose to go her own way after hearing of the acquisition, without knowing American Home would turn out to be one of the casualties of the financial crisis.
Sturges’ company today is staffed by a fair number of executives who have former ties to Waterfield, but it is taking a different path. Waterfield’s originations tended to be dominated by FHA lending. Although Hallmark is well-versed in FHA, it is primarily a conventional lender. It also does some niche lending in originating construction loans for borrowers.
Anecdotally, she said she has a sense that there has been some interest in buying from families that “want to get in on the lower rates” and some more confidence in the economy driving move-up and first-time homebuying. But the market for first-time homebuyer financing is still tight, she said. If indemnification concerns in the FHA market were to be resolved it may help, something Sturges said she believes FHA commissioner Carol Galante is aware of and working on.
Hallmark last year originated just shy of $1 billion in volume, Sturges said. “We’re hoping to exceed that this year even if refis go away,” she said. “We’ll see how the year plays out. Because we’re purchase focused, we have not seen a real big dip.” Sturges said when rates rose the company saw volume “trailing off a little,” but said it at deadline it was “still up over last year.” Hallmark’s purchase-refi breakdown was about 75% and 25%, respectively, last year. This year, she said, the breakdown is closer to 80% purchase and 20% refi.
The company had gotten licensed in over 20 states and Sturges indicated it might be open to acquisition activity. In addition, USA Wholesale is starting to get its operations off the ground. She said adding a correspondent lending channel also could be a future strategy. “I really want to focus in the next five years on our growth,” Sturges said.
When asked how big that growth might be and whether the company might pursue a national expansion, she said, “It all depends on how business shakes out” and what the “value proposition” is.
For the time being, she said her mindset is, “You just do what you do, and you do it well.”
