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 Dave Vida, president of loan servicing with LenderLive, to learn how the company strengthened its servicing platform by adding a correspondent division.

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

Vida: LenderLive has a long history of serving community banks and credit unions. As the market continues to evolve, these institutions will again gain share in providing quality mortgage solutions to consumers. Our culture, technology platform and experience in serving the unique needs of a community lender fits well into our overall strategy of providing end-to-end solutions and component solutions supporting mortgage originations, settlement services, document management, servicing and correspondent lending. We are also never in competition with our clients as we are not a retail direct lender nor do we cross sell any bank products.

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

Vida: We are first and foremost a service provider. With 25 years of history (inclusive of acquisitions) providing domestic-based mortgage outsourcing solutions, the addition of a correspondent lending offering allows LenderLive to provide our clients the flexibly and options to also support their secondary market needs.  In addition we provide unique customized loan servicing solutions which enable our clients to maximize their cross-selling opportunities with private-label and co-branded messaging.

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

Vida: The rapid market changes and compliance complexity are by far the greatest challenges facing our clients. First, the large rate movement this summer created a significant disruption to origination flow and may change the way our clients are committed to the business. Second, the CFPB, QRM and other compliance-related issues are very challenging for our clients that do not have the resources to track, implement and manage all the changes.  Fortunately, LenderLive provides multiple service offerings through our outsource services division to help our clients evaluate options other than building internal infrastructure and elevating fixed costs.

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

Vida: It is a long-term strategic decision for LenderLive and really rounds out our client offering – it ultimately provides the most flexibility and options to companies engaging us for our other services.  We also believe that community lenders will be key in helping bridge the transition from a refi market to a long-term purchase environment.

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

Vida: Today we are focused on three segments. 1) providing services to community banks through our partnership with the Independent Community Bankers of America (ICBA) 2) serving credit unions via our relationship with CO-OP Financial Services and 3) purchasing loans from our other internal clients that leverage LenderLive as a service provider.  We will continue to expand our sales force, product offerings and platform for our partners and customers and have steady growth goals over the next 12 months.

HW: 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?

Vida: We believe our keys to success will be our focus on the community lender segments (not trying to buy loans from every lender), our deep experience in serving this group, our commitment and resources managing compliance and our service culture. We strive to be the “ease of use” lending partner.

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

Vida: A lack of focus and differentiation.  As a result of the market drift and low interest rate environment, it appears as if a number of lenders jumped in without a strategy. Now that the market has changed, having a unique focus and offering may be required to survive in the interim and to be successful in the long run.

HW: Tell us about the team you are building.

Vida: We have built a strong team of leaders from various lenders in the industry with an entrepreneurial spirit yet the right blend of big company experience and background. We also have tremendous technology resources, scalability and a suite of proprietary applications that enable us to be responsive to our clients’ needs and market changes. 

HW: 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?

Vida: The value of the mortgages has to decrease and ultimately the price paid for servicing (the value of the MSR) will decline as rates continue to increase. The multiples paid today may not be rationale nor generate a sufficient return. The evolution of the GSEs and a private secondary market will also influence the value and premiums. Rates are always changing in the mortgage business and you have to adapt. We have a long-term view and our clients typically have strategies and customer bases that also survive market fluctuations. The current environment takes the easy loans out of the process and also may eliminate some competition. This summer has been tough on refi-centric call center originators.

HW: 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, etc.?

Vida: With a long history as an outsource services provider, document solutions provider, and licensed lender, we have a strong commitment to compliance and leverage a large team of internal leaders as well as the best external counsel available. We also have a large suite of proprietary technology that enables our company to more efficiently adopt changes and new requirements as we are not relying on third parties to implement change.