Knowing is Half the Battle: Selecting a New Retail Branch Home

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BLOG VIEW: The retail mortgage industry has changed drastically since the early 2000s, with brokers and originators bearing the blame for the industry implosion and losing favor among consumers. Many people, and some rightfully so, exited the business, while others went to work for large banks.

Those of us left on the retail side who were determined to stay in the industry and provide a valuable service to consumers were faced with several decisions including how we did business and with whom. The fact of the matter is that the success of a mortgage originator has everything to do with the company it selects to work with, and what is required to stay in business.

Having been in the mortgage industry since 1994, I have seen several cycles and developed a strong understanding of what it takes to be a successful originator. Having run a company and worked for independent lenders has given me the perspective of what it takes to lead, be successful and meet the needs of consumers.

In early 2018, there were rumors that the company I had chosen to work for since 2015 was considering exiting the distributed retail arena. The company had shuttered multiple branches by the end of the first quarter of 2018, but we were told that there was no plan whatsoever to exit retail 100%. Given the climate of decreasing loan volume and shrinking profit margins, the truth lay somewhere between the rumors and what we were being told.

I did what anyone in my position would do or at least should do: I began contacting mortgage companies to prepare a “Plan B.” The interesting caveat about this was I was not just looking for myself. I had a group of talented originators whom I had been with for more than five years. We have been fortunate to add new team members over the last few years which allowed us to open 10 branches in multiple states in the mid-Atlantic and South.

It is a unique group with very specific needs. I had recruited most of them with the promise of looking out for their well-being, which is a promise I wanted to keep. We specialize in providing mortgages to unique borrowers who would not otherwise have an option because they don’t fit into the vanilla credit box. We have wonderful camaraderie and enjoy working with each other.

My team partner, Kathy Keller, and I to put together a “must haves” list of what we would need from a new company. The list includes the following:

  • The ability to lend in multiple states, especially the ones where we had open branches;
  • Servicing more than 70% of all closed loans;
  • Providing a true no-overlay underwriting policy on all agency products;
  • Must not be owned by a single stockholder;
  • Financially capable of investing in the growth of a distributed retail channel; and
  • Giving a voice to the channel leaders in all decisions that affect the respective channel.

There were a handful of other items that were more negotiable; however, the list above was non-negotiable. It was also a lot different from the must-haves list I had written in the past. After almost 25 years in the business, one’s focus changes. That is why it is important to step back occasionally and review what is important to make one successful and if a company is helping one achieve it.

I met several very good lenders from across the country. And there were some that were not good and would not be a good fit for my team. Overall, what I found was a group of excellent lenders with some amazing leadership teams. And while some companies were unable to meet our “must-haves” list, they provided a value proposition that was worth researching how those offers would fit our needs.

The entire process is extremely time-consuming, but it is an important one to ensure you select the right company. What follows are some of the main things we found:

  • One company offered us seven figures to run its Eastern division. While that was enticing on the surface, the company would not have allowed us to continue to work with the borrowers we wanted to serve;
  • Another company was shrinking its national footprint instead of growing;
  • Another company had a wonderful marketing network but had borrower overlays on government products; and
  • Yet another company wanted all its branches to look identical and therefore, would not allow us to continue to be successful in our uniqueness.

It’s not to say that these are bad characteristics. They just did not work for my team.

In all this vetting, it became clear that one lender was able to fulfill our list. Having the core foundation of those requirements was what really mattered.

When it was announced officially that my previous company was, in fact, exiting the distributed retail space, moving our group was easy. We had done the homework already, and the decision was made after serious consideration.

The process reminded me of something I and many others have said: “It’s easier to find a job when you don’t have to find one.”

Fobby Naghmi is senior vice president, Eastern Division, for Planet Home Lending. 

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