Virgin Money to Fill Wholesale ‘Gap’

Virgin Money USA announced Thursday it had entered the wholesale mortgage business and boasted more than 150 brokers that had already signed up on its network. Licensed in 35 states and planning to be fully licensed by year-end, Virgin Money will offer conventional mortgage products and Federal Housing Administration-backed loans. “At a time when others are exiting the mortgage space, leaving consumers with fewer financing options, Virgin Money is jumping in with its wholesale mortgage program,” said Richard Branson, founder and chairman of parent company Virgin Group.

Virgin Money’s wholesale business will operate with technology that provides real-time status updates and rate quotes, clear and up-to-date product guidelines and paperless underwriting. Officials said the company will offer competitive rates and a high-touch broker relationship, as well as deal structure assistance, to the industry. The company has also promised a “fair but stringent” broker approval process, according to a press statement.

“Virgin Money sees a growing service gap in the mortgage industry, which we plan to close and own,” said founder and CEO Asheesh Advani. “…We’re not there just to sell a loan. We support brokers through to the closing.”

The news comes as brokers have seen a mass retreat from wholesale lending among major banks. The effects are far-reaching and, combined with a race for warehouse money, make originating in the industry a challenge, one source told HousingWire. The source, an independent mortgage banker, said his company did almost $2 billion in originations in 2008, partly working with JP Morgan  Chase & Co. (JPM: 42.46 -0.21%) on the warehouse side. His company, however, is no stranger to the Chase’s recent wholesale channel exodus, which effectively cut off business to many mortgage brokers in the industry. “For the broker side, it’s hard right now,” said the source, on condition of anonymity. “I don’t know what people will do if they’re working as a broker right now. I don’t know how they’re going to get through it.”

Virgin Money’s venture into the wholesale business may end up easing the strain placed on brokers that have found themselves without lenders willing to fund loans. Virgin Money is a company within the Virgin Group, whose many global subsidiaries offer a menagerie of services, from luxury hot air balloon flights to stem cell banking to mobile phone services.

Write to Diana Golobay at diana.golobay@housingwire.com.

Disclosure: The authors held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.