TheMReport — News and strategies for the evolving mortgage marketplace.
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16 | Th e M Rep o RT Victor ciardelli Guaranteed rate Jim Blaine State employees' credit Union BoB walterS Quicken loans I f you believe all the hype, the 2008 mortgage crisis pushed nonbank lenders and smaller banks to the sidelines as they sought retreat from the post-Dodd-Frank world— surrendering the future of mortgage lending to well-capitalized big banks. But nothing could be further from the truth, industry experts say. Lenders outside the tradition- al big-box lending space emerged from the shadows in 2015, picking up the pace in lending just as larger mega–banks pulled back. Nonbanks alone became sig- nificant players—from Guaranteed Rate to Quicken Loans, these institutions are experiencing a solid year. Nonbank lenders did lessen their stride after the financial cri- sis subdued activity in the private- label securitization segment, but they never disappeared altogether. And in 2015, it seems these institutions—along with other nontraditional lending platforms and regional banks—are back with a vengeance, deploying tech- nologies and marketing strategies to take advantage of what has become a more favorable lending environment for nonbank players as big banks take their foot off the originations gas pedal. "The story of market share in the originations space is more around who is not lending than who is lending," says Amy Brandt Schumacher, COO of Prospect Mortgage. "During the crisis, some non- banks were focused on non-prime lending and were not sufficiently capitalized to survive the high level of repurchases that occurred to lenders that existed pre-2008," Brandt Schumacher further explained. "Non-banks had their lowest share of the market in 2009 and have grown steadily to over 40 percent in 2014. This growth is due to the banks pulling back their exposure to mortgage, from 2010-2014 the major banks reduced share. As the major banks had such dominant positions, this meant that nonbanks filled the void and grew." As evidence of this shift, Victor Ciardelli, CEO of Guaranteed Rate, said in March 2015 that his nonbank lending platform experienced its best month in corporate history, with the firm funding $1.95 billion in total loans. Jim Blaine, president and CEO of the State Employees' Credit Union (SECU), notes that credit unions have become an increasingly attractive option for borrowers. The SECU is the second largest U.S. credit union and serves North Carolinians. "Our business in the market is up and we have a sense that the main big banks in our area—Wells Fargo and BB&T—are pulling back over concerns of regulatory compliance," Blaine said. A key piece to this changing marketplace is not just the actions of mega banks but new technolo- gies entering the market, Brandt Schumacher says. Ciardelli agrees that today's nonbank lenders have found a market where their technologies and products are catching favor with consumers once again. "I'm not sure big banks are pulling back, but they are defi- nitely losing market share when looking at quarterly trending," Ciardelli said. "Big banks are lethargic, not good at customer service, and communication is terrible. We're growing by the New OrigiNatiONs LaNdscape