MILFORD, CT—The TMS Funding wholesale division that Internet retail lender Total Mortgage Services expanded from a small test group to 17 states recently plans to continue to grow gradually but serve brokers efficiently using paperless processing once they sign on.
“We’re not signing up 100 brokers [all at once],” TMS president John T. Walsh, told MT in an interview at his Milford, Conn., office. But the company will be stressing a “good turnaround” on loans for brokers once they have signed up, he said.
The company itself is a broker in four states and plans to use that experience to provide operational efficiencies its broker business partners in the wholesale channel can appreciate. “We realize the challenges brokers are going through,” he said.
But Walsh stresses the company wants to maintain its slow and steady purchase-focused approach to growing the wholesale business for several reasons. The channel is designed to be a hedge for its largely refinance-driven retail unit and reduces channel conflict. It also aims to address the demand for loan quality in the secondary market. “It’s been pretty crazy in terms of getting loans purchased,” Walsh said.
Jim Lynch, executive vice president, wholesale division, told MT during its visit to the company’s offices that the company is buying agency-eligible loans and “one-offs” that are up to investors’ standards.
“If we can’t do the loan, we don’t want to waste anyone’s time,” he said, noting that the company has the expertise to accomplish this and plans to inform brokers immediately when this is the case instead of dragging the process out.
The company plans to do its due diligence when it comes to the process of screening and brokers, Lynch said, noting that it has several means to do this he would not specify.
Lynch, who worked for the Michigan-based Home Savings of America prior to joining TMS Funding, said the company ultimately wants this to be available in a total of 44 states. The exceptions are those that require a company have a brick-and-mortar presence to operate there, he said. By yearend the company expects to have expanded into 35 states, a spokesman said.
As in its Internet-based retail unit, the company has counts on technology to keep its overhead low in the wholesale channel. The paperless processing that is being used in the wholesale channel to accomplish this is particularly important in today’s market where loan volumes have been relatively low and regulatory costs such as state licensing have been mounting.
The company has seen what Walsh described as notable growth for a small company, a circumstance that can be enticing to investors looking for acquisitions. But he added such a move is not in the cards, given that the company has relatively favorable finances, is debt free and likes to have the free rein to operate autonomously. It also has no plans to further expand its channels into the correspondent business and thus will not buy closed loans. “Right now, it’s not an option,” Walsh said.
He said TMS is maintaining and hopes to continue maintaining its reputation as a repurchase-free lender in a market where repurchases are common. The only mar on the company’s record is 2006 settlement with the Connecticut Department of Banking that Walsh said resulted from incorrect advice from an a now-former attorney about whether an office that did not process loans needed a license then. Walsh said the company was asked to pay a relatively small civil money penalty fine to settle the Connecticut DoB’s complaint, something the DoB confirms.
