Friday Funding is a HousingWire web series profiling the lending segment in depth, and highlighting the operations and the people that make this sector tick. In the latest installment, we sat down with the Senior Vice President of Correspondent Mortgage Services at BOK Financial (BOKF) Robert Ross to learn how the correspondent division provides a unique and focused strategy.

HousingWire: Who is your target customer and why are they a good fit for your business model?

Ross: BOK Financial Correspondent Mortgage Services’ target clients are banks and credit unions selling closed loans that need prior approval or delegated underwriting options.  As part of a super-regional financial services company that operates with distinct franchises in seven markets, we understand the competitive landscape smaller banks and credit unions face.  In addition, we also recognize how important it is that those institutions keep and enhance their relationships with their customers and members.

HousingWire: How does lending fit into your overall business strategy? In other words, what other lending divisions do you have, i.e. warehouse, wholesale, ect.?

Ross: BOK Financial has been in the retail origination space for more than 20 years and we have one of the top mortgage trading desks in the U.S. providing hedging services under the name of BOSC, Inc. to mortgage companies.  In short, it is a natural extension of our expertise in this space and we are focused on Correspondent Lending only.

HousingWire: What do you see as the greatest challenge(s) your clients face today?

Ross: Our clients are navigating a vast amount of regulatory requirements while maneuvering through the burnout of refinances. To relieve pressure during these difficult times, we offer our clients a unique non-compete strategy and go to great lengths to refer business such as customer requests for refinancing, new loans or other transactions back to the originating lender.  To emphasize our long-term commitment to our clients, we service correspondent mortgages under the neutral brand name FirstLand Mortgage Servicing. This long-term, non-compete strategy has resonated very well with the prospects and clients that do business with us.

HousingWire: What made your firm decide to ramp up its correspondent division?

Ross: We continue to believe the bank and credit union space are underserved.  We have a singular focus on that market segment and we know it very, very well.

HousingWire: How broad of a market do you serve today and what does the next 12 months look like from an expansion standpoint?

Ross: We are currently purchasing loans in 34 states and are expanding into the West Coast and Northeast.

HousingWire: There have been a lot of new entrants into the correspondent market over the last 12 months, what is going to be the key that helps your firm rise above the rest?

Ross: Keeping our promises.  We have a very personalized “boutique” feel to our platform. From day one, clients have complete access to key decision makers, delegated client support and the full attention of an investor who will work tirelessly to earn and keep their business. We are also able to deliver on the promises of a common sense operations platform, regional sales coverage by managers that are empowered to make decisions to serve their clients and the deployment of resources to assist our clients in building their businesses.

As mentioned before, we do not cross sell our clients, customers or members. Rather, we take it one step further and refer them back to the originating correspondent if they wish to engage in a new transaction. 

HousingWire: With the increased competition in the correspondent arena, what do you think is the single most common mistake you see other correspondents making?

Ross: Growing too quickly.  Growth is fantastic, but when you begin to lose focus on who you serve and you are not able to deliver on your commitments, you are beginning to fail.

HousingWire: Tell us about the team you are building and who sits at the core of the operation?

Ross: All of our Regional Sales Managers are experienced, highly competent and are backed by an Account Manager who provides additional support to the region.  Our operations team is led by folks with direct experience at the Agencies.  

HousingWire: Correspondent lenders are paying a high premium for loans. What do you see happening to spreads over the next 12 months? How will rising rates impact your business?

Ross: Spreads will tighten before they normalize.  There are many competitors chasing a smaller pool of business and only those with a well thought out platform, solid execution and a strong capital base will survive.  Rising rates will mean that refinances will continue to be a smaller share of the business overall and that will require us to continue to grow our counterparty base with the right partners to compensate.

Finally, with all the new compliance and regulation rules coming out, how will new compliance rules impact your business? What are you doing to stay on top of compliance, i.e. technology, new software, ect.?

The enhanced compliance and regulatory burden may force many lenders to exit the mortgage space. We have deep compliance and risk management bench strength in our staff to drive interpretation of the new rules for our lenders and are making the investment in a new loan operating system. Additionally, we will continue to focus on quality counterparties and provide them the tools, technology and training they need to navigate the litany of rules and regulations that have become the new norm.