February 2014

TheMReport — News and strategies for the evolving mortgage marketplace.

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38 | Th e M Rep o RT o r i g i nat i o n s e r v i c i n g a na ly t i c s s e c o n da r y M a r k e t ORIGINATION The LaTesT originators, lenders to redefine relations in new year hammerhouse says 2014 will be "the year of the originator-free agency." a s new regulations go into effect and a new mortgage market takes shape this year, lenders and originators must reconsider current relationships and look for partnerships that sync with their priorities, according to Hammer- house Strategic Growth Partners, a Mission Viejo, California-based national firm focused on recruit- ing and strategic growth for financial services companies. Hammerhouse has dubbed 2014 "the year of the originator-free agency," stating in a recent release, "[T]he key trend impacting the residential mortgage market in 2014 will be the development of the free agency market for suc- cessful mortgage originators." "In reality, 2014 is the first year of the new mortgage industry that will remain in place for many years to come," said Drew Waterhouse, managing director at Hammerhouse. As such, "[a]ll lenders and indi- viduals in the mortgage industry will be forced to redefine their business throughout 2014," he said, adding, "This evolutionary process may result in relationships between lenders and originators that fall out of alignment." Amid new regulations and an increasing focus on the purchase market, originators will focus on finding lenders that help them build their brand, feature competitive price models and strong product growth strategies, have the ability to help originators avoid "compliance traps," and support jumbo lending. Originators will also focus on "model-matching" with six fac- tors in mind: leadership, culture, operations, business model, tech- nology, and geography, according to Hammerhouse. Lenders will seek relation- ships with originators that have a strong brand, are effective in sub-markets such as millennials and reverse mortgages, are com- patible with their structure, have a "self-sourced book of purchase- oriented business," and have a business plan focused on growth. Lenders will have to "convince proven producers—both existing and potential originators—that they offer the combination of benefits that will best serve them in the new environment," Waterhouse said. This "combination of benefits" includes "superior marketing and operational support, rigorous compliance systems, competi- tive product and pricing options, management and leadership expertise, and work/life balance," according to Waterhouse. Overall, the market "will begin to operate in an external environment featuring additional comprehensive compliance and regulatory constraints, and lower overall volumes with a purchase orientation," Waterhouse said. Amid new regulations and an increasing focus on the purchase market, originators will focus on finding lenders that help them build their brand.

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