Q: How would you categorize the overall state of today’s wholesale lending division?
David Williams: Compared to what it was like five years ago, I’d say the health of the wholesale lending arena is excellent—but this is a relative statement. In the years since the meltdown, we’ve seen an unprecedented number of new rules and guidelines being introduced, which has forced everyone to change their game. For wholesale lenders in particular, there is enormous pressure to demonstrate that our systems and processes are up to the task, because our partners are placing their reputations on our ability to deliver.
Compliance issues aside, the past two years have created huge opportunities for wholesale lenders, especially with Wells Fargo, Bank of America and other takeout lenders now out of the game. That’s left a lot of open doors. On the other hand, many new players are struggling because they failed to differentiate themselves or they simply have not sufficiently upgraded their systems and processes to handle the sort of oversight required in today’s industry. Other wholesale lenders have survived and achieved some measure of success as niche players, but I don’t think it will serve them well over the long term.
Q: For the benefit of those that are not familiar with your division, what makes RightStart Mortgage’s approach to wholesale lending different from your competitors’ approach?
David Williams: Our approach is to give brokers exactly what they need and constantly refine and improve what we do. Everything starts with an intense focus on three areas: speed, technology and service.
As for speed, we are a direct Fannie Mae and Ginnie Mae lender, which means we can get full approvals and close in as little as 15 days, sometimes less. That gives our partners real leverage in markets where housing inventories are low and buyer demand is high. Our technology also keeps our operations at a fast tempo. Brokers that work with us get access to our 24/7 online underwriting platform, which delivers instant approvals and locks anytime they need it.
Service is where I feel we really knock the ball out of the park, though. Besides offering a large array of products, we regularly provide fully underwritten loan approvals, and tools such as lender paid mortgage insurance (LPMI), which enables borrowers to lower monthly payments while avoiding the expense of paying mortgage insurance. We also work incredibly hard to create and preserve relations with brokers, because we know how much they count on us to perform.
Q: What is your opinion on the CFPB’s “mini-correspondent” policy guidance, and how will this new policy guidance impact mortgage banking?
David Williams: It’s hard to say for sure what the overall impact will be. However I think it will definitely have an effect on brokers that tried to position themselves as bankers, but never had the processes or infrastructure that mortgage bankers need to protect themselves and maintain compliance. From that standpoint, I think a lot of folks were waiting for the CFPB to say what we already knew. So it’s a good thing that the agency is trying to clarify the issue.
Q: What do you see as your division’s greatest challenges in the next 12 months?
David Williams: Competition is easily the biggest challenge we’ll face over the next year. On one hand, the departure of big banks from the wholesale space has very fortuitous for companies like ours. On the other, it’s created a very diverse playing field in which the competition for business has been fierce. It’s likely to get even more intense if we see any significant improvement to the housing market in 2015, as many believe will be the case. If that happens, I expect we’ll see even more players enter the space.
We really can’t do anything about the economy or, for that matter, who we’re competing against. But we can totally change what we do, the products and service we offer, and how we position ourselves in the market. After 25 years in the industry, we’ve learned the value of constantly taking inventory of these aspects of our business and trying to determine whether we could be doing things more efficiently or bringing our partners more value. It’s incredibly fulfilling work and it’s never easy. But of course, it’s not supposed to be.
RightStart Mortgage is online at www.rightstartmortgage.com.
Phil Hall has been (among other things) a United Nations-based radio journalist, the president of a public relations and marketing agency, a financial magazine editor, the author of six books and a horror movie actor. Also, as you will discover, he is not shy about stating his views.