New Penn Financial LLC, Plymouth Meeting, Pa., is the latest mortgage lender to open a mini-correspondent loan origination channel. This past summer,
New Penn’s program will be purchasing loans from mortgage bankers, community banks and credit unions. There is an option to bank or broker loans through the channel, said Lisa Schreiber, vice president of correspondent lending, in an interview.
New Penn has wanted to start this kind of program for a couple of years, but had a lot on its plate, including adding a broker/wholesale channel, she said.
But this past summer, origination volumes started to decline and there is an upcoming regulatory shift in January. Clients of New Penn and other aggregators are fearful of these changes are positioning themselves so they are not at risk.
So, more emphasis is being placed on having a mini-correspondent program in the wholesale community and “we felt we were missing a big opportunity by not having a program,” Schreiber said.
Brian Simon, chief operating officer, is quoted in a company press release as saying, “This new program adds the third leg to our successful correspondent and broker/wholesale business channels. We’re pleased to support the nationwide mortgage community with services that fulfill their requirements for mortgage revenue with reduced risk. We’re here to help these businesses grow.”
At the start, it will only acquire loans from entities which have their own warehouse lines (or own funding source) and not deal with companies looking to make the move from mortgage broker to mortgage banker. New Penn is not providing warehouse lines as part of the mini-correspondent program.
Loans will be submitted to New Penn for underwriting and clear-to-close during the process. The client will complete the closing/funding process and then sell the loans to New Penn.
Thus the client is the lender of record and is responsible for disclosures, closing and funding while New Penn makes the loan decision.
New Penn is making its proprietary program set available to the mini-correspondent seller. This includes
For the portfolio products, there are going to be additional approval requirements placed on the sellers by New Penn, including having a higher net worth. The option to broker or bank, she noted, is because these companies might have limits on their funding sources and/or would rather not fund in their own name.
Mini-correspondent sellers can also control the closing/document drawing process through using approved vendors. They can extend purchasing days beyond lock expiration dates. Sellers can also attain greater price flexibility.
Schreiber said the company is looking to bring the wholesale, mini-correspondent and correspondent groups and bring them under a single third-party origination channel. Account executives will be able to offer all three options to customers.
