There is an increasingly complex environment for mortgage originators, with impending regulatory pressure that has to be adapted to, reduced volume along with a shift from refinancings to purchases and margins getting compressed, said the CEO at Lenders One.
Specifically, the management team has “over 100 years’ worth of hardcore mortgage banking origination experience. So we have been in the shoes and have faced many of the same issues that our members and preferred partners and vendors face every day,” he declared.
“We know what they are up against, we know the decision making process and we know the complexities they are dealing with.”
In Altisource, Lenders One has a parent company which he said was “whole heartedly” behind it. Altisource is a vendor management company that specialized in business processing outsourcing. It has been supportive of Lenders One’s growth needs and it would not have been able to do that at the high level required without that support.
At the company’s annual conferences in the last couple of years, its message to its members has been changes in the business environment are coming and are members prepared for them?
Specifically McGuiness said, Lenders One asked if the members are ready for the changes in regulations and are they doing the origination process as efficiently as they can?
For the latter question, it is focusing helping members understand what the true cost to originate a loan is and how it will shift when they no longer control the closing date on 70% of their pipeline (this is because, unlike refinancings, purchase transactions typically have a contracted closing date).
It introduced a member saving model, which shows them every single operating line item they need to run their business and how they can optimize the cost of each of those items, he said.
“It helps them in their vendor selection process; it helps them to make the decision whether they want to outsource certain components of their business and it also helps them determine where the peak efficiency is for them,” McGuiness said.
Lenders One was established in the first place to help mortgage originators execute better, including getting a better secondary market price for their loans. That still holds true today, he said. It is like a three legged stool, he continued. Lenders One will help members earn more money; save money (through the preferred partner arrangement) and it will be their advocate.
But like any good three-legged stool, depending on the environment, one is leaning a little more on one leg than the other two, he declared.
While much of the focus in the past has been on that first leg, the one that gets better pricing from investors, now members have to focus on the second leg, cost to produce a loan.
Lenders One ascertained the needs of its members and went out and sought solutions. “Between our vendor partners and our members, they sorted out the world and did a tremendous amount of business with each other, with value going both ways,” McGuiness noted.
The difference now is the market is more complex and with the new Lenders One, it is diving into the process because every one of its members has unique needs. It takes a lot of pride in the level of expertise in the people it has been able to attract to Lenders One and go out and be part of the process, he declared. That is the biggest change over the course of the past year at the cooperative.
