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Being a small to midsized mortgage lender in today’s environment is tough – there’s no denying it. The cost to comply, together with a shrinking origination forecast in the coming years, means that it could get even tougher. But, you don’t have to go it alone. Partnering with the right investor can help you minimize risk while expanding your product offering at the same time.
In the world of mortgage finance, bigger doesn’t always mean better – a principle that applies to aggregators too. Instead it’s important to find the right partner with the right mindset, to ask questions of your existing investors, and consider looking for new partners if you don’t see your existing relationships adding significant value to your business.
If you’ve been working with the same investors for several years, have you considered the cost of inaction? The industry may have advanced since you made the decision to partner with your current investor, and your competitors may be getting an edge from the benefits that come from innovation.
To help you find the right fit, it’s important to ask four key questions:
- How can you help my business run more efficiently?
- What are you doing to help me lessen compliance risk?
- Can you help me address repurchase risk?
- What else do you offer that makes you stand out from other investors?
For example, new entrant Texas Capital Bank started its Correspondent Lending division just a little over a year ago. Being new to the market allowed it to do some things other aggregators can’t. With no legacy systems and processes, they implemented a state-of-the-art system designed specifically for the correspondent space – a system that leverages technology to perform a data scrub to ensure consistency across the entire mortgage file, while shaving days off of standard review times. Because of this process, repurchase insurance is automatically included on every loan sold at no additional cost to the seller, with no additional insurance underwriting required.
These supplementary benefits driven by innovation can be a game changer for your business. But it’s not just about technology. Texas Capital Bank also offers new Qualified Mortgage (QM) products that appeal to creditworthy borrowers who may not qualify for standard conventional financing. Recently, they launched a doctor’s loan program to meet the credit needs of newly minted doctors and dentists, and are looking to further expand into additional QM products in the coming year.
Jack Nunnery, Executive Vice President and Director of Correspondent Lending at Texas Capital Bank, added: “We see our role differently than most aggregators. We don’t look to just purchase loans, but to help our clients grow their businesses by opening doors to Realtors® and helping them to say ‘yes’ more often.”
Innovation in the mortgage industry provides opportunities for originators to reduce potential repurchase expenses and related risks while also introducing new products that help attract borrowers. Partnering with an investor who implements new solutions can help you derive the benefits of technology and product innovation without a costly up-front investment.
