Friday Funding is a HousingWire web series profiling the lending segment in depth, and highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with Tom Wind, executive vice president of residential and consumer lending with EverBank Financial Corp., to learn how the lender stays on top of the shift from a refinance to purchase market.
HousingWire: Who is your target customer, and why are they a good fit for your business model?
Wind: EverBank is a national lender, providing a wide range of home lending products and services to clients, including jumbo portfolio loans and agency products. We’re a full-service financial services company that has decades of experience in home lending, along with banking, wealth management, commercial real estate lending and commercial finance services.
Our correspondent clients cover the spectrum from large national mortgage banks to smaller lenders who specialize in serving their local markets. Our jumbos are a great fit for our larger lenders who often securitize their agency product while our full-service approach meets the more comprehensive needs of our smaller lenders. Being part of EverBank, we have the resources to serve clients across the country but we remain agile enough to take a reasonable, common sense approach to the needs of our clients and their customers.
HW: How does lending fit into your overall business strategy? In other words, what other lending divisions do you have, i.e. warehouse, wholesale, etc.?
Wind: Home Lending is an important part of EverBank’s overall business and strategy for future success.
In addition to our correspondent channel, we have strong and growing retail and consumer direct channels. Our three channels work together in a very complementary way to bring us scale and diversification across our business. Through our home lending channels we create flow for our servicing business and generate assets for our bank portfolio.
In addition, we introduce a wide range of clients to EverBank. For example, we have had tremendous success in building relationships between our correspondent channel and our warehouse finance business that serves mid-to-large mortgage banks across the country. The key has been to build an experienced team who truly understands the benefits of working together and is dedicated to bringing expert advice and great service to their clients.
HW: What do you see as the greatest challenge(s) your clients face today?
Wind: A lot of attention is being given to the rise in interest rates and the rapidly declining refinance market. While the effects of a smaller market create a set of challenges, our lender clients—whether large or small—have deep experience in the business and have weathered through many refinance cycles.
What really differentiates today’s environment is the tremendous complexity and uncertainty emanating from unprecedented regulatory and structural change. We know our clients need partners who can help them rapidly adapt to the changing landscape. At EverBank we bring a wide range of capability to our clients and are investing in our Home Lending business to ensure we have the products and services to meet their needs today and into the future.
HW: What made your firm decide to ramp up its correspondent division?
Wind: Our long history in mortgage banking gives us great insight into the needs of our clients. Unlike some larger lenders or new entrants, we remember what it is like to sell loans on a correspondent basis and that helps shape how we interact with our clients. We know that correspondent lenders need a strong, nationwide partner who can deliver quickly, resolve problems and understand the sometimes "not quite inside the box" needs of their customers.
In partnering with lenders across the country, we are able to bring scale and diversification to our home lending business, generate assets for our bank portfolio and create warehouse finance client opportunities. In short, we think correspondent lending is a great business opportunity and a very natural extension of our capabilities in the residential lending space.
HW: How broad of a market do you serve today, and what does the next 12 months look like from an expansion standpoint?
Wind: Our correspondent channel serves clients large and small, from coast-to-coast.
Overall, our home lending business originated approximately $3.2 billion of residential mortgage loans in the second quarter of 2013, an increase of 43% year-over-year and 12% compared to the first quarter. Included in that total are prime jumbo originations of $1.1 billion in the second quarter, an increase of 36% from the prior quarter.
For some time, we’ve anticipated the shift to a purchase-money driven market, the resurgence of prime jumbo lending and the need for strong, experienced partners in the mortgage market. We have positioned our home lending business to benefit from these market changes. Our investment in correspondent is one example of this positioning and an area that has strong growth potential in the coming years.
HW: There have been a lot of new entrants into the correspondent market over the last 12 months, what is going to be the key that helps your firm rise above the rest?
Wind: First and foremost, we believe experience, service and relationships really do matter. It may sound a bit cliché, but it remains a basic principle that we’ve never forgotten because we know what it is like to have been a correspondent seller. Our sales and operations teams work hand-in-hand with our lenders, following the details of the loan process and ensuring the loans are reviewed and purchased quickly and easily. Lenders also need partners who bring the strength and resources to help them adapt to the changing market. We believe our mortgage experience and focus combined with the strength of EverBank uniquely position us in the market.
HW: With the increased competition in the correspondent arena, what do you think is the single most common mistake you see other correspondents making?
Wind: I think that more than anything it’s a lack of focus on the fundamentals of the business: creating and sustaining strong relationships. We know through hard-fought experience in this business that correspondent lenders need a strong, reliable partner that will truly be with them every step of the way through what can sometimes be a complex and daunting loan process. We also know that correspondents need a business partner that can not only promise but deliver speed and simplicity to the loan process.
HW: Tell us about the team you are building and who sits at the core of the operation?
Wind: We’re very proud of the team we’ve built because we feel we are bringing to the market a substantial amount of hands-on experience, creativity and a willingness to find solutions.
Shelly Kobb leads EverBank’s correspondent lending sales and operations teams. She previously served as senior vice president of correspondent operations at Aurora Bank and held senior positions with Bear Stearns Residential Mortgage, National City Mortgage and Countrywide.
Shari Ferline is EverBank’s senior vice president, national sales manager, and has more than 18 years of industry experience. She joined EverBank in 2011, and previously held management positions at Mellon Bank, Countrywide, Chase and Aurora Bank.
HW: What do you see happening to spreads over the next 12 months and how will the potential for rising rates impact your business?
Wind: Given the volatility in the markets, it’s very difficult to predict where spreads will go over the next 12 months, and we’re certainly not in the crystal ball business. But I can tell you that we’ve spent the past few years repositioning our business to succeed in what we believed would be a higher interest rate environment and a gradual shift away from refinancing to a purchase-driven market.
Without question, it’s a highly competitive and changing market – particularly in the correspondent space. We believe that the organizations that will succeed in this environment are the ones that forge strong business relationships, focused on delivering certainty, speed and efficiency to their business partners and clients.
HW: Finally, how will new compliance rules impact your business? What are you doing to stay on top of compliance, i.e. technology, new software, etc.?
Wind: We’ve certainly seen significant changes in the regulatory environment during the past five years, and I know that everyone in this industry understands that more regulatory change and complexity is coming in the years ahead. Regulatory compliance is a challenge for every financial services company today – one that requires a major investment in new technology, business processes, controls and professional talent.
We understand that navigating the post-crisis regulatory environment really is the "new normal." EverBank has made – and continues to make – significant investments in our corporate risk management and compliance functions. As we’ve done this, our goal is to remain focused on serving our clients and making sure that our residential lending business can deliver to the market the products and services that our clients need today.
