Bank of America, GMAC, Met Life and now, Citibank: If you’re a wholesale loan originator, that list of names reads like a litany of woe, as they’re all lenders who have pulled out of wholesale and correspondent lending over the past year.
So why are some correspondent lenders smiling? Well, they say that the big boys’ exit from the dance floor has made them seem a lot less like wallflowers and a lot more like Mr. Right when looking to attract top sales staff.
“The correspondents, the mid-level, to larger-level mortgage bankers, have made it through this. Our deaths have been exaggerated,” said Brian Koss, executive VP of Danvers-based The Mortgage Network. “No one wanted to move before Dodd-Frank came out. And then once it did, it was like they put the music on for musical chairs. There’s been constant ‘dating’ since then, trying to figure it out. And in the meantime, the larger firms have been blinking and saying, ‘we want out,’” he explained.
“I had one guy who said in that 2008-2009 period, ‘I got nervous that you guys weren’t going to be around, and I wanted to go over to a larger firm.’ He felt that you needed size to get through this. And he’s back now,” Koss said.
And he’s not alone – Koss said his firm has picked up staff from Bank of America, Wells Fargo and Met Life in recent months.
As the wave of refugees fleeing from large lenders begins to swell, regional non-bank lenders said they think they’re well positioned to pick up some experienced hires. And there’s already some evidence they’re right.
After rising as high as 4,529 in 2008, the number of licensed loan originators’s took a dive, falling roughly 15 percent by 2011, according to figures from the Division of Banks and the National Mortgage Licensing System (NMLS). The NMLS system was introduced in 2010, and doesn’t count bank employees.
But over the past year, the number of licensed, non-bank loan originators has crept up, rising from 3,858 for the first quarter of 2011 to 4,301 by the third, an increase of 11.5 percent, according to the latest NMLS figures.
Remaining Flexible
And while the changes in the correspondent and wholesale channels may have had some side benefits for non-bank lenders, that good fortune hasn’t extended to mortgage brokers. Often smaller operations who don’t deal directly with as many investors, many experienced mortgage brokers have been squeezed out by the changes.
“If I were a salesperson in the mortgage industry, I wouldn’t look at a broker at all, and I would absolutely look at the correspondent, the non-bank lenders. Everybody runs to the banks as a flight to safety, but ….I choose to go with greater flexibility,” said Amy Tierce, regional vice president at Fairway Independent Mortgage in Needham. “The banks are just more conservative – they’re regulated to the nth degree,”
To be sure, the lending environment is still tight. Jerami Marshal, chief operating officer of Reliant Mortgage Co. in Beverly, said overlays and pre-closing conditions have slowed processing times – underwriters previously able to process 10 or 12 loans a day now average four or five.
“We have plenty of resources – we have plenty of places to sell loans still. There’s a huge appetite from the depositor and the non-depository lender,” Marshal said, even though, “Everybody is just tightening up dramatically.”
Having those options is an important part of what drove Fred Allard back into The Mortgage Network’s arms, after recent posts with both a national lender and a small one.
“You need to look at the companies that have weathered all these changes and continue to be successful,” he said. “I think the experience of the staff here, with years of experience in the mortgage business, they know how to make a loan work with the least amount of issues for the borrower.”
“That Armageddon fear has passed – for people like us, I think we’ve become more of a destination,” said Koss.
