Ohio Originator Expansion Plans Attract Investor Capital

The Home Lending Source (HLS), a 10-year-old residential mortgage originator headquartered in the Cleveland, Ohio area recently secured a $3m investment, with a letter of intent for another $5m, as the firm continues to clock record growth. The HLS, formerly known as Consumers Mortgage Corporation of Ohio, is seeing huge opportunity in the state’s origination space and is securing the confidence of investors through its plain vanilla approach to business. “People thought we were crazy for not offering subprime, alt-A and other exotic products, but it’s allowed us to keep good standing financially, as well as with HUD, VA and the regulators,” said CEO Doug Reilly. “By sticking to our core principles and long-term strategy, we can utilize this and our partners’ future investment pledges to create the foundation we’ve always envisioned for the company.” In the absence of large lenders in the state, such as Countrywide and Taylor, Bean & Whitaker, as well as other medium-sized players such as Real Estate Mortgage and Freedom Mortgage, HLS is positioned to move from $17m a month in originations in 2009 to more than $60m a month by the close of 2010, Reilly said. By the end of the year, the workforce is expected to quadruple to 250, and HLS is in the position of being able to cherry-pick the best mortgage finance employees in the state and recruits aggressively in order to do so. But before it could expand, HLS spent a year sourcing and implementing end-to-end loan origination software, accounting systems and pricing modules. Reilly estimates that 10% of gross revenue went to these systems and plans to increase the investment as the company grows. “To us, we didn’t come out and say ‘this is our budget’ when updating our systems,” said Zubin Nagpal, a vice president at HLS. “We went out there to see the best of the best and picked not only what we thought was best for us at the moment, but what could support the organization in 5 years.” The Home Lending Source operates out of a number of retail branches in Ohio, Michigan, Florida and Arizona, and the company has identified the Mid-Atlantic, Southwest and Southeast as potential markets for expansion. “There are a number of strategic advantages to increasing our geographic footprint and driving volume,” said Reilly. “There is no shortage of opportunity today: while smaller players struggle to meet net worth and compliance requirements, the big banks simply cannot adjust quickly enough to the changing environment. To us, this means huge opportunity.” Write to Jacob Gaffney.

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