With servicing multiples as low as they’ve been over the last 18 months, the head of Edison, N.J.-based Real Estate Mortgage Network Inc. has decided to take advantage of the situation, growing its portfolio by starting a correspondent lending division. The new unit will operate out of its new Irvine, Calif. wholesale fulfillment center.
Peter Norden, chief executive of REMN, noted that at his previous company, Opteum Mortgage, it had all three channels with each contributing one third of its total production.
The big aggregators right now are buying loans at multiples under three, and therefore REMN decided to retain most if not all of the servicing rights it is generating. Add into this historically low interest rates and underwriting criteria that has been as stringent as it has been in a long time.
“To us the value of that servicing is higher than historically it would have been under prior years’ conditions, and we really are looking to build our servicing portfolio as high as we possibly can get it during this period of time.
“So correspondent was a natural for us,” Norden explained.
The company hired Bela Donine as managing director of correspondent lending and Melissa Sherman as managing director of West Coast operations.
Donine has more than 25 years of lending industry experience holding senior executive positions with several national lenders, including Greenlight Financial, MAGI Advisors and Opteum. Her experience includes overseeing risk management, wholesale operations and underwriting.
Norden said the opportunity to work with Donine again was another reason for starting up the correspondent channel. And the timing was right with the company opening the Irvine wholesale fulfillment center.
Putting the correspondent unit into the Irvine center is a “perfect fit,” he said.
REMN currently has a $3 billion servicing portfolio, which he said is growing rapidly as is because it is keeping the MSRs on 75% of its production. The company is originating about $400 million a month right now.
Correspondent should add another “couple of hundred a million a month.” The servicing portfolio could be at the $5 billion to $6 billion by the end of the year and as high as $20 billion by the end of next year.
It is the best opportunity he has seen in his 35 years in the business for growth, and to create a servicing portfolio of high-quality loans with low rates that are likely to stay on the books for years to come.
The intent is for the business to be nationwide, although loans will be processed out of Irvine. Initially the target market is credit unions and small community banks that are having problems selling whole loans with the pull back in the correspondent channel.
But he anticipates eventually doing business with mortgage bankers.
REMN is planning buying Federal Housing Administration, Veterans Affairs and conventional mortgages. It expects to start purchasing loans in the channel in the next 90 to 120 days.
Sherman’s duties are to provide support for the new correspondent division and manage wholesale fulfillment operations for the West Coast.
Sherman past experience includes operational positions with GMAC ResCap and Icon Residential Lenders.
REMN is recruiting for positions in operations, as well as wholesale account executives and mortgage loan originators.
Opening the Irvine wholesale center was because REMN has a large east coast presence, plus another center in Texas.
“From my own perspective, I have always been about diversification. One of the things we needed to diversify was our actually production, and we needed more production from the West Coast,” explained Norden.
