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 Impac Mortgage President Bill Ashmore to learn how the mortgage firm distinguishes itself by educating clients and building market awareness.
HousingWire: Who is your target customer and why are they a good fit for your business model?
Ashmore: Our target clients, which we have developed product and service solutions for, include Credit Unions, Community Banks and other financial institutions. We are not a bank and are focused solely on the residential lending industry so we do not compete with our credit union clients for deposits or other non-residential lending products like many of our competitors. We have the experience and know-how to assist lenders with rounding out their product offering to include 203(k) renovation lending, HARP and other products. Since we are a direct lender with Fannie, Freddie and Ginnie we can expedite our process on behalf of our clients without the need for middlemen.
HW: How does lending fit into your overall business strategy? In other words, what other lending divisions do you have, i.e. warehouse, wholesale, ect.?
Ashmore: Lending diversity is an important aspect of our strategy, both short term and long term. As such, we have three lending channels, wholesale, retail and correspondent lending, with an effort to create a more balanced production mix. In addition to these channels, we also recently introduced our warehouse lending division. We believe that offering warehouse financing to our existing and new customers is expected to be an important strategic move anticipated to help the continued expansion of our correspondent lending channel.
HW: What do you see as the greatest challenge(s) your clients face today?
Ashmore:The greatest challenge our clients face today is uncertainty caused by rising interest rates, combined with a lack of knowledge of the financing options available to them. In addition, everyone has been affected by the recession. In today’s housing market landscape even the best-qualified loan-seekers go through a more stringent loan process. This makes it more difficult for people to take the plunge where before the housing crash it was much easier to qualify. That being said, overall it’s better this way, but it does present more of a challenge to those seeking a home loan.
HW: What made your firm decide to ramp up its correspondent division?
Ashmore: Impac had previously operated an extremely successful correspondent lending division for many years. In early 2012, we felt that there was a great opportunity for a lender of our size to reenter the correspondent marketplace. Our correspondent lending operation targets community and regional banks as wells as credit unions and smaller select mortgage banking firms, and focuses on being a take-out investor for institutions that originate quality conventional and government loans eligible for sale to Agencies. There was a need for this type of lender, and we felt that we could successfully fill this role.
HW: How broad of a market do you serve today and what does the next 12 months look like from an expansion standpoint?
Ashmore: Currently we have brick and mortar retail branches in 9 states along with two call centers with retail licenses across 35 states. For wholesale and correspondent we are licensed nearly nationwide. We’re working to make inroads into additional markets within 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?
Ashmore: At the end of the day, our experience and the education we provide to those who look to us for loans directly or for a correspondent client looking to us as an exit-based investor sets us apart from our competition. We take a hands-on consultative approach to a correspondent clients’ retail business and offer opportunities for digital marketing, social media and lead generation education and training to help enhance a clients’ retail lending business. We provide our clients with access to educational tools to expand relationships with real estate agents and build vital market awareness with consumers interested in a mortgage.
HW: With the increased competition in the correspondent arena, what do you think is the single most common mistake you see other correspondents making?
Ashmore: What separates us from other correspondent lenders is our focus on providing superior customer service and finding the right clients for our business. Our correspondent lending division seeks to establish strategic relationships with institutions that mirror our strong company principles for responsible lending, prudent underwriting and fraud prevention.
HW: Tell us about the team you are building and who sits at the core of the operation?
Ashmore: Our team consists of highly experienced and qualified Correspondent Account Executives, each with a long and successful history in the capital markets arena. Everyone at the core of our operation has more than 25 years of experience in the field. Our CEO Joe Tomkinson and myself founded Impac nearly 20 years ago, surviving some of the greatest crises in the mortgage lending industry along the way.
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?
Ashmore: Over the next 12 months we expect to see spreads grow. Rising interest rates will impact our business a little but the thing people need to remember is the recovery is happening but it isn’t as strong as most people think. A significant amount of homes being purchased right now come from REO bulk buys from investors. This inflates the numbers a bit. We’ve still got a ways to go before things truly recover.
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, ect.?
Ashmore: We will definitely see a significant amount of change and there will be some adjustments. That being said, our experience, systems and processes are flexible and will be able to adapt to meet this challenge. Our focus on education will allow us to adapt more quickly than our competition. As mentioned earlier, this education aspect allows us to be highly effective in allocating our time and resources and helping our Correspondent clients be aware and deal with new regulations.