Total Mortgage Services of Connecticut sees a silver lining in Bank of America's recent, and abrupt, exit from the wholesale channel: the void created will help TMS grow its broker business even faster.
"It's a positive sign for us," said TMS CEO and founder John Walsh. "Their departure opens up a huge opportunity for us."
Three months ago the 13-year-old privately held company—a retail funder for most of its life—began table funding loans in select markets.
"We recently hired reps for New Jersey and Massachusetts," said Walsh, "but the big state for us is New York. We have an application pending there that should be approved any day now."
With B of A out of wholesale—including the high-volume New York market—the possibilities for TMS now, suddenly, look wide open. "Our wholesale effort will take off big in the next three to six months," the CEO predicted.
But Walsh, a former broker himself, is also cautious. TMS has been working on building its wholesale business for a year now, focusing on due diligence checks and having the appropriate software in place to handle the volume. "It's slow and steady with us," he said. "We take the conservative approach, but I feel very confident right now."
He isn't alone. Brokers are hopeful that with B of A gone other large and medium-sized players might either expand their presence in wholesale or enter anew. After all, refinancings are booming.
CitiMortgage, for example, originated $2 billion in mortgages through the wholesale channel in the second quarter, a 30% increase from the same period last year. A few months back Citi stopped table funding jumbo loans and rumors were rampant that it might quit the business entirely—but so far that hasn't happened.
In short, the broker industry hopes that its business has seen the worst of it and only better days are ahead.
Speaking at the recent New York Association of Mortgage Brokers trade show, Wells Fargo Home Mortgage executive Richard Bloom told attendees that the channel is "here to stay" and "will thrive for many years to come."
Bloom made his comments during a panel on regulatory updates. Other session speakers echoed his comments.
But facts are facts: In the second quarter wholesale lending accounted for just 11% of all originations nationwide, according to figures compiled by National Mortgage News and the Quarterly Data Report. Three years ago wholesale lending had a 30% market share.
Joe Amoroso, director of national sales for Real Estate Mortgage Network, said he, too, believes the channel is not going away, but noted that the industry was "caught off guard" by Bank of America's recent announcement that it was exiting the space.
He noted that correspondent lending—a business that B of A is staying in—has "more skin in the game."
One regulator speaking at the trade show, Rholda Ricketts, deputy superintendent for the New York State Department of Banking, said eventually the broker business "will begin to grow again and flourish" after a time of upheaval and change.
Marc Savitt, former president of the National Association of Mortgage Brokers, is still a believer in the channel. "I would say we're back to normal now—where we were in 2001," he said. "In 2002 to 2004 everybody and their brother jumped into this business and a lot of them gave brokers a bad image. Well, they're gone and we're better off for it."
