The smarter mortgage lenders are already preparing for the day when
Ray Brousseau, executive vice president for Carrington Mortgage Services, said the company is using a different marketing strategy this year as opposed to last. The company originates loans both retail and wholesale. In 2012, 70% of its production was in refinancings. The wholesale side in particular, he said, had a heavy refi share.
But in 2013, Carrington has made “a concerted effort to begin to shift our organization towards purchase business. Not a complicated strategy but a difficult one,” said Brousseau. That being said, it is better to start working on the relationships with purchase referral partners such as Realtors and attorneys right now, than six month from now when all originators will likely be chasing after that business.
This simple strategy is showing signs of paying off right now. In 1Q13, purchase volume has increased 13% and the pipeline of loans in progress shows that this trend will continue going forward, he said.
The goal is to have more than a 50% share of purchase volume by the end of this year “and we’re well on our way to achieving that.”
On the marketing side, Carrington has launched the 30-day purchase promise program in its wholesale channel, similar to something it already offers in the retail channel. If the originator submits a complete file (with a few exceptions) the loan will be funded in 30 days or Carrington will waive certain fees.
Brousseau said Carrington is confident it can deliver a predictable experience for the borrower and if it doesn’t it will pay the borrower.
The programs give retail loan officers and wholesale account executives something to talk with their B2B sources about.
Fairway Independent Mortgage Corp. is going down a different track in helping its branches to increase their originations.
The United States probably has seen the biggest growth in its military since the end of World War II. Those soldiers and veterans are eligible for the Veterans Administration loan program, which allows for no down payment.
Ken Pederson, a branch manager in Lancaster, Pa., recently attended one of the workshops the company had in the state on working with military borrowers led by Louise Thaxton, who herself operates a branch in Louisiana.
The company offers a designation, certified military mortgage specialist to its loan officers; it is now offering this as a continuing education course for Realtors.
There were 140 Realtors present at the Lancaster class, he said, and the class gets Fairway’s name in front of those agents.
While the Lancaster area is not home to any major facilities, it is near a large reserve base. VA loans are another tool it can offer to Realtors to help increase sales.
And even if the physical VA loan count is very small, the Fairway name is now been in front of 140 Realtors.
Pederson added that approximately a year ago, Fairway hired a national marketing director and marketing department and that unit is creating compliant materials for the branches to use.
On the wholesale side, United Wholesale Mortgage is doing something similar. It has just launched a web portal that will let its mortgage brokers produce custom flyers and other marketing materials.
Mat Ishbia, president of UWM, said when “brokers do well and get more business, UWM does well gets and more business. So what we wanted to do was partner with our brokers and let us show them what kind of marketing we see that works in the industry.
“We have a whole team of marketing people that the brokers might not have access to,” and they have created materials that the brokers can customize to send to their Realtors or other referral partners or their consumers.
They can get more business because they have professionally created materials. The days of wholesalers faxing rate sheets are past and make the loan a commodity.
UWM is looking to make it more than a commodity. “In the wholesale world, you have to help the broker grow its business. You have to be a true partner,” Ishbia said.
“We are not competing with our brokers; we want our brokers to succeed. That is how we grow.”
While the marketing materials do not cost the brokers anything, it does cost UWM money and time to create, maintain and update the website.
But if it gets the mortgage broker a couple of more loans each month, “hopefully they will send them to us,” Ishbia said.
For the members of the Lenders One co-operative, dealing with all of the recent regulatory changes, as well as getting ready to incorporate all of the pending changes yet to come, has led to an increased cost to produce a loan, said CEO Jeff McGuiness.
And the big concern is that increased cost will get worse in a purchase loan market. “We subscribe to the theory that it costs more for a shop to originate a purchase transaction operationally than it does a refinance transaction by in large because you don’t control the closing date,” McGuiness explained.
Combine that with the high probability the expected reduction in volume will lead to compressed margins, which impacts revenue.
Lenders One place in that environment is to lighten its members’ fulfillment burden, he said.
So part of the co-operative’s job is to continue to identify emerging correspondent outlets for its members. This has been a challenge as several larger players have shut their aggregation channel, to be replaced by newer, eager, but smaller institutions.
Secondly is to develop new products and services that can be administered through Altisource Fulfillment Operations Group (Altisource is the owner of Lenders One). The unit does underwriting, title and quality control, among other services. It can offer pricing incentives because of bundling of services. The goal is for Lenders One to make it more efficient for its members to use those services.
Finally, Lenders One will continue to support its vast network of program partners, which provide virtually any services an originator needs.
“We have to help [members] be more efficient and bring down their operating costs,” McGuiness said. In turn, this allows those independent mortgage banker members to do what they do best, which is go out and originate mortgage loans and have the time to go out and establish the relationships needed for a successful purchase business.
