This week, our spotlight shines on Mount Laurel, N.J.-based Freedom Mortgage Corporation, which is offering a service called “mortgage department in a box” that is designed to help smaller financial institutions in today’s lending environment.
Q: How did Freedom Mortgage’s idea of a “mortgage department in a box” come about?
Stan Middleman: Mortgage lending is far more complex today than it was when I entered the business. You need technology, expertise, back office support and financial resources to create loans quickly, economically and compliantly. The additional requirements mean that it is harder for smaller and medium sized financial institutions to have mortgage departments when their main business lines emphasize banking services other than mortgage lending.
Community banks and credit unions excel at serving their customers and members with products that often don’t include home loans. But they want to offer mortgages to keep customers from going elsewhere and lower the risk of losing them to larger banks.
Freedom Mortgage is one of the largest lenders in the country, and we have plenty of capacity in all aspects of the mortgage manufacturing process. So it made great sense to leverage those capabilities and offer a turnkey solution for these smaller and medium sized banks and credit unions. The division is called the Financial Institutions Partner Group (FIPG).
Q: Currently, how many financial institutions are making use of the services offered by the Financial Institutions Partner Group? And what are your projections for 2015?
Stan Middleman: We had great acceptance of this business segment in 2014. We launched the group in April of 2014 and by October had 25 institutions on board. With many more in process and in view of the outstanding feedback we have received, I expect we can more than double this number in 2015. Lending is not getting any easier for community banks and credit unions, so it is logical that this offering will continue to grow in popularity.
In a short amount of time, the FIPG has done a great job demonstrating the benefits of a partnership and instilling confidence in Freedom Mortgage’s ability to deliver a cost effective and scalable mortgage solution to a tough audience: institutions for whom superb customer service is their stock in trade. It may sound simple calling it a “mortgage department in a box” solution, but there are a lot of moving parts requiring precision and great execution to make it a reality.
Q: This is a time when many community banks and credit unions are struggling with the regulatory burdens applied to residential lending. How does your offering help alleviate these burdens?
Stan Middleman: We have multiple models available to our partners, one of which is a co-branded solution that can help alleviate regulatory burdens. The cause for a great deal of the complexity and cost of residential lending these days is the regulatory burden. There is very little room for error in every aspect of a mortgage transaction, from the first borrower contact all the way through to investor delivery. Scrutiny is greater than ever, so the downside for community banks and credit unions continues to increase.
By partnering with Freedom Mortgage, our partners will have access to a unique model that will mitigate their risk, reduce their cost and allow them to focus on their core banking products.
Q: What is your prediction for community bank and credit union mortgage lending in 2015? Will we see more participants, or less?
Stan Middleman: I would say more borrowers will be turning to their community banks and credit unions because of the uncertainty in the market. Consumers want to feel comfortable in those relationships and are therefore more likely to talk to the credit unions that think of them as ‘members’ rather than as mere transactions. Community banks are famous for personalized service, which is exactly how they can succeed even when located on a corner opposite the megabank. They tend to raise the bar on service levels, and when they can offer mortgage products using a resource like Freedom’s FIPG, it is a win for them and for their customers.
It is important to understand what this means to Freedom Mortgage, also. We would not be as successful as we have been with this division if we lacked the same sense of customer sensitivity as the bank or credit union for whom we are providing the service. We must perform every bit as effectively and with the same service levels as the institutions we represent, and this is not easily accomplished. It requires can-do attitudes, high professionalism, superior expertise and great technology, all of which are integral to Freedom Mortgage’s core business values.
Freedom Mortgage is online at www.freedommortgage.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.