Tom Wind Is Revamping How Big Banks Do Mortgages

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Tom Wind is back in the driver's seat in mortgage operations at a leading bank for the first time since the Great Recession, and he's finding his feet quickly.

In less than a year, his boss at U.S. Bank has been surprised by how fast he's developed a rapport with his new team; and Wind has plans for the financial institution that are out-of-step with some of its peers but true to the bank's roots as well as his own.

Before the crisis, Wind served as CEO of Chase Home Mortgage and president of CitiMortgage, but he also has worked in positions that span capital markets and outsourcing; and his broad experience informs the course he is setting now as president of U.S. Bank Home Mortgage, a role he began in January.

The path Wind is taking the bank down is striking in that it aims to account for regulatory and operational costs in the mortgage area without protest, and forge ahead without being bogged down by them.

In contrast to banks that have pulled back from Federal Housing Administration lending due to its liabilities or abandoned the single-family retail channel due to rising costs, U.S. Bank intends to invest in these areas.

How will the bank afford those financial outlays and get a good return on its investment? Wind has a strategy that relies in part on a proactive operational strategy that hearkens back to the days when the industry was bent on efficiency above all else.

But Wind is clear he won't sacrifice documentation the way lenders a decade ago did.

"That's really what I think went wrong in the crisis. We jumped to streamline and we weren't doing all the work," he said. "The real attraction about the things we're looking at from a technology perspective right now is we can streamline the process and have it much more efficient, but actually document things."

It sounds like a worthy goal, but can Wind make the numbers add up? Those who know him and his accounting background said if anyone can, he can.

The long run of low interest rates has had its upside for lenders by bolstering refinance volume. But the longer that low rates persist, the greater the concerns about refi burnout and a decline in origination profits.

The cyclical nature of rate risk suggests lending executives like Wind — who have broader insight into areas like accounting, capital markets, and servicing — would be much sought after; particularly if they have shown the ability to adapt quickly to change.

But perhaps due to recent rate conditions and traditional industry silos, they're rare.

"Tom had in-depth knowledge in origination and servicing. I had candidates that had one or the other, but not both. None of them were well versed in capital markets," said Kent Stone, vice chairman and head of U.S. Bank Consumer Banking Sales and Support, who was responsible for hiring Wind and is his boss.

Wind's ability to check those boxes made him a good match for U.S. Bank. Along with his broad base of experience, he has proved adaptable and has a reputation for remaining calm and identifying contrarian opportunities when the chips are down.

At the height of the housing boom in 2006, for example, Lehman Brothers recruited Wind to help reorganize its mortgage affiliates. There he was CEO of Lehman's Denver-based mortgage banking unit, Aurora Loan Services, which predated Lehman and was not part of its 2008 bankruptcy.

After he left Aurora, Wind briefly took the helm at J.I. Kislak Mortgage, a nonbank lender based in Miami Lakes, Fla. At the time, many lenders were wary of Florida, which was still reeling from the foreclosure crisis. But Wind saw an opportunity.

"The best time to get into a market is when there's blood in the streets," he said in a 2011 interview with NMN.

Stone calls Wind "unflappable" and said he hired him in part because his name came up repeatedly when he started asking people in the industry to recommend candidates. Wind hadn't previously been on his radar.

"His name was mentioned by a couple different sources and that's what led me to him," Stone said.

Wind's reputation is quieter than that of leaders who give frequent, public speeches; but he's known for team-building and being experienced, but not staid.

Wind "thinks about the business anew every day," said David Lowman, executive vice president of Freddie Mac's single-family business. Lowman, who has known Wind for nearly 30 years and worked with him at Citigroup, said his former colleague's understanding of the financial aspects of the business is particularly keen.

Stone knew Wind had a reputation for communicating well both up the chain of command and downstream when he came in and said that Wind's work at U.S. Bank so far has borne that out.

"When we first started, I wrote down a list of all the key people that he should talk to. Sometimes you hire people and they need a little bit of prodding to do that, but by the next week he was on a plane and he'd met those people, and then some," Stone said.

U.S. Bank previously had two industry veterans from inside the bank lead its mortgage unit and the company did gain some market share under prior leadership, according to Justin Fuller, a senior director in Fitch Ratings' financial institutions group. But both have since retired, according to Stone. Wind said his leadership won't be so different from theirs, except that he will take the work they did a step further.

"We really want to build out what we have," Wind said.

Purchase Power

In the spring of 2011, Wind departed Kislak Mortgage for EverBank, the top-20 mortgage lender that agreed to an acquisition by TIAA earlier this year. One thing he likes about returning to a larger top-five bank mortgage player is the increased economies of scale.

"I think we're a fantastic size to really have depth of resources and scale in the business, while at the same time we still have a great overall way of doing business that feels a lot like a small institution," Wind said.

"We are a top bank, we are a top mortgage company and we have that size and scale. I look at us relative to the largest institutions and we have those resources, we have those capabilities and we have great ratings in terms of access to funds at low costs."

U.S. Bank's AA financial strength rating from Fitch do rank among the highest for banks globally, said Fuller.

Mortgages are a significant part of some earnings line items that contribute to U.S. Bank's strength. But like any bank's earnings, rate sensitivity can also make the mortgage contributions volatile.

"If you have enough volume, then the business is going to make good returns," Fuller said. "When volume falls off they [lenders] will reduce capacity. That's kind of the game."

A plan to focus on purchase mortgages could help U.S. Bank address this rate volatility, while also making it more competitive.

"We have kept the focus around purchase, and I think that's really where some of the nonbanks have made progress and the bigger banks haven't been as focused," Wind said.

The industry is increasingly moving that direction, said Fuller.

"Every time you thought rates couldn't go any lower, they did, and there's a decent amount of refi activity they [banks] were able to capture," he said. "But there's probably been enough refi burnout now that they'll focus much more on the purchase market."

In addition to increased purchase lending, there are other strategies U.S. Bank is pursuing that could help it differentiate itself.

Up Next in Part II: Many big banks are backing away from the retail channel and FHA lending due to rising compliance risks. But Tom Wind sees an opportunity for U.S. Bank to leverage those challenges to improve efficiency and transparency.

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