Waterstone Mortgage’s new CEO on prepping for the post-boom market

Coming onboard to run a mortgage organization that just set a record for quarterly volume might be akin to taking over a sports team that just won a title. The key is to keep up the momentum, even as the organization faces headwinds, both expected and unexpected.

In filling a position that’s seen a fair share of turnover in recent years, new president and CEO of Waterstone Mortgage Jeff McGuiness came on board after the unit did $1.3 billion of originations in the third quarter. Sixty-four percent of those dollars went to purchases, while the industry average for the period was 43%, according to the Mortgage Bankers Association.

Most recently, McGuiness was chief sales officer at Embrace Home Loans, a nonbank lender. Before that, he was the CEO of Lenders One, a cooperative founded to serve the needs of independent mortgage bankers. But he also has experience working at lenders associated with depositories like Aurora Bank and Citimortgage.

National Mortgage News recently spoke with McGuiness about joining Waterstone. Questions and responses have been edited for length and clarity.

Normally, when a new CEO comes in, they’re asked about what they are going to change. For Waterstone, is it a case of staying the course?

They’ve historically been a purchase-oriented organization. They're 100% retail and I like their focus and commitment to that specific channel. The stability, the past performance and the history of the organization drew me there.

The bigger picture is the market that comes after this market and what that competitive landscape may look like. Even this year, our numbers have remained quite strong on a percentage basis around purchase. It’s appealing to me that level of focus and commitment to that space [both retail and purchase] and I think it will be a distinct competitive advantage going forward.

Are you looking to expand Waterstone’s retail footprint or would that be on hold given the current conditions regarding the pandemic?

Absolutely we would anticipate expanding the footprint further, and so we're definitely on the lookout for that expansion opportunity. Can I give you a direction? Not just yet, but for sure we do have an appetite for further geographic expansion.

How is it to be joining an organization in the midst of a pandemic?

It is strange, no doubt. The strangeness is really the inability to be as hands on and as face-to-face as you would like to in the early days at the company. For sure, the part that’s hardest, and definitely hard to replace is that face-to-face, being in the market, being in the branches. It was part of my style, which has definitely been hampered.

Your most recent positions were with nonbanks and by contrast, Waterstone is a subsidiary of a depository. That provides a funding source for loans, as well as the ability to hold on to them rather than sell in the secondary market if pricing is not favorable. Is that going to be a different experience for you, especially in terms of product?

I see the backing of the bank and the corporate structure as a huge competitive advantage from a capital perspective. The backing of an organization that has remained committed to the mortgage banking space is really appealing to me, particularly as we go through any future downturns. Having a parent company that has a really deep understanding of the mortgage banking space and then can back that up with a depository institution, again is a competitive advantage. Without a doubt, it puts a couple of more tools in our toolbox to leverage, depending on the conditions of the market.

What are you bringing from your experiences at Lenders One and Embrace to Waterstone to help it move forward?

Where my concentration is going to be is on the overall operating structure and making sure that we are as efficient in our execution as we can possibly be. And I'll be focusing specifically on our competitive position, the offerings that we put out to our Waterstone loan officers to make them the most competitive. I want to make sure we are as fluid and nimble as we possibly can as we continue to grow.

Having been at Lenders One and seeing first hand some of the best practices of those member companies, and the ability to leverage some of those practices at Embrace proved the point and I hope to take it to the next level at Waterstone.

Do you see further movement towards a more digital process and if so, what do you plan to do at Waterstone to push that along?

First and foremost, Waterstone Mortgage and WaterStone Bank have a really nice tech stack and they've always been on the front edge of tech and digital capabilities. When I think about a post-pandemic world, I think about those winning organizations that are going to be able to figure out a way to leverage that.

It’s that dual problem of wanting to create as much flexibility and efficiency for your team, yet at the same time, you got to be cognizant that organizations are made up of people and culture and part of them being together is a critical component of that. I think it’s a challenge, but a good challenge, of how do you create that new environment for the operations staff and how they do their jobs in the most efficient and flexible manner, but at the same time ensuring they feel as if they are part of the team.