Even as overall wholesale volumes continue to decline some players continue to grow their stakes in the space like Texas-based Caliber Funding and 360 Mortgage Group, which may represent two different ends of the range of approaches to lending in this third-party origination space.
Caliber sees room to grow in wholesale, but also in retail, as other players depart. In contrast, earlier this year 360 Mortgage Group exited retail altogether. One of its top executives will even go so far as to say he believes ultimately the broker-to-banker trend will reverse and bankers will want to become brokers again. But he acknowledges he is somewhat of a contrarian.
“We made a commitment to wholesale and we’ve been on both sides (retail and wholesale). But we’re kind of a contrastrategist, if you will, in how we run the business,” 360 Mortgage Group president Mark Greco told this publication.
In contrast, Caliber Funding said its recent hirings by Caliber Funding LLC, Irvine, Texas, are designed to help the company grow both its wholesale and retail production channels, said the new chief executive, Brian Simon. Joining Simon at the company is Michael Massella, hired as senior vice president, wholesale production.
Times are tough in the wholesale community, yet Simon said there is always going to be mortgage brokers out there, and there is the opportunity to pick up market share as a lot of big players are leaving.
“We want to show those good brokers that are left, that are still in that business, there is a major player out here that wants to make a big push in the wholesaler sector. We’re committed to that part of the business.
“We’re equally committed to retail. But we see a tremendous opportunity in wholesale. The quality of work being produced now is terrific. For someone whose got the fortitude and the vision to try and build a business during a downturn, now is the time to pick up relationships and employees that would never have been in play previously,” he declared.
Simon comes to Caliber after serving as chief operating officer of Freedom Mortgage, where he was responsible for loan production and execution and developing corporate strategy and growth.
Prior to joining Freedom Mortgage in 2004, he was executive vice president of Prime Mortgage Financial and in charge of all loan production, secondary marketing and strategic growth.
Massella previously was senior vice president of First Savings Mortgage, and before that was president of production at Aegis Mortgage Corp.
Caliber already has a wholesale production channel in place, Simon noted, “but we are making a renewed and reinvigorated effort to grow the business.” Massella’s hiring “reinforces our commitment to being in the wholesale space,” he continued.
The company has a national scope, being licensed in 44 states. It has operations centers in Texas and Arizona. Caliber’s retail business is focused on Texas, California, Arizona, Illinois and Minnesota.
In its current iteration, Caliber is two years old, but some of its predecessor companies have been in business for years.
The private investor firm Lone Star Funds backs it.
Caliber is hiring account executives. The structure of the channel is still in the formative stages, he said.
Besides the usual government and conforming products, Simon said Caliber is working on a nonagency jumbo product to offer through the wholesale channel, as well as possibly some niche government products like the Federal Housing Administration 203(k) program.
It is in the process of hiring a new national sales director for retail. Like in wholesale, there are opportunities for growth in the retail channel, Simon explained. There are opportunities to add relationships and loan officers, from people “who aren’t enamored working for the large banks.”
It is looking to add a few key markets at first, before growing the business across the country.
It is a traditional brick and mortar retail operation, purchase-driven, Realtor- and builder-focused, he said.
Taking a different tack, Greco said his company left retail because, contrary to the popular view, he thinks a recent compensation rule change is “going to favor the broker more than the banker.”
“I think it’s going to require a great deal of administrative resources and I think that the vagueness and the lack of guidance that has been provided on the rule is going to leave a lot of room for interpretation,” Greco said.
“It is simpler [to be a broker] but in my opinion it is one of those situations where simpler isn’t good,” Ari Karen, an attorney at Offit Kurman who specializes in compensation and labor issues, told this publication, when asked about this interpretation of the rule. He said he has heard some brokers espouse similar views but is concerned they may not fully see the competitive challenges the rule creates for them.
Greco said he thinks brokers have largely adapted to the rule since it came out. “I think that the brokers have gotten used to the changes,” he said.
360 Mortgage Group is licensed in 27 states ranging from Washington state to North Carolina and Georgia and at press time had its license pending in Maryland and Virginia, Greco said.
“Really our presence before today was really focused on the western United States in California, Utah and up into the Northwest areas of Washington and Oregon,” he said. “Our presence has been everywhere between there and Texas and we just recently began our expansion into the Southeast.”
Geographic expansion “is very important in this day and time with the industry as a whole being down [in volume],” Greco said.
“In order to stay with our growth pattern that we’ve seen over the last several years, it’s very important for us to continue to expand not only geographically but with our customer base as well, so we’ve got a model and a plan to be aggressive in that expansion so that we can continue our growth pattern.”
