Friday Funding: Envoy CLD fills gap ‘one lender at a time’
Friday Funding is a HousingWire web series that profiles the lending segment in depth, while highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with Dan Hastings, executive vice president of Envoy Correspondent Lending Division, to see how the lender fills a gap in correspondent lending while creating innovative partnerships one lender at a time.
HW: Who is your target customer and why are they a good fit for your business model?
Hastings: Our target customers are mortgage bankers, credit unions and regional banks that want more alternatives for their originations and are interested in fast, accurate service from their correspondent investors. These are companies that often provide great personal service to their borrowers but have limited places to go with their loans owing to retrenchments by their former funding sources. Our aim is to fill that growing gap in correspondent lending and enable these clients to offer excellent borrower experiences while originating high quality loans. We call it, "Creating innovative partnerships, one lender at a time."
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.?
Hastings: Correspondent lending is an important part of Envoy Mortgage’s overall strategy. We are active in retail lending in 48 states through a 60+ branch network, have a national builder division and a fast-growing servicing operation that provides a very good hedge for our origination channels. Envoy Correspondent Lending Division rounds out those offerings and is a key element of our overall business strategy.
HW: What do you see as the greatest challenge(s) your clients face today?
Hastings: I see two big challenges facing our clients today. First, the regulatory and compliance environment, which is like nothing the industry has ever seen before. It poses challenges from both an implementation perspective and from the costs involved in complying properly. Secondly, with fewer loans being originated and more lenders entering the space, our clients are faced with continuing margin compression.
HW: What made your firm decide to ramp up its correspondent division?
Hastings: Everyone involved with Envoy benefits as we build the servicing portfolio to achieve a position of strength with investors and service providers. Envoy CLD will help substantially in realizing this goal, enabling the company to offer attractive rates and terms to our borrowers as we grow the Envoy brand. We intend to become one of the largest and most admired companies in the mortgage business for retail, builder and correspondent lending. We became a top 50 mortgage lender in 2012, which was the foundation for the next objective of creating our correspondent lending channel.
HW: How broad of a market do you serve today and what does the next 12 months look like from an expansion standpoint?
Hastings: We are a national correspondent lender and are continuing to add senior client executives to broaden our presence with our potential clients around the country. We are interested in speaking with successful, experienced correspondent sales executives.
Within a few months, we expect to round out our sales presence to all geographic regions of the continental U.S. Over the next year, we will be ramping up our participation in mortgage industry events and leverage other opportunities in order to bring Envoy CLD service to as many clients as possible. It is all enabled by having great people, both in the field and in our Monroe, La., main office, and we are right on track with our teambuilding efforts.
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?
Hastings: We believe that there is just no substitute for experience and that’s the way Envoy CLD was designed. Our senior executives and account management team members literally have hundreds of years of experience in correspondent lending. This means that we are able to move in directions that will help our clients succeed, smoothly and confidently, with great service and technology support.
HW: With the increased competition in the correspondent arena, what do you think is the single most common mistake you see other correspondents making?
Hastings: It is probably either trying to be all things to all people, or trying to compete in too tightly-niched markets like correspondent lending. Over the past few years, companies have struggled to launch an effective correspondent channel using their retail and/or wholesale platforms. These companies have been able to thrive with expanded margins – until recently. As those margins contract, some still struggle in developing an effective operational platform. They will find it much more difficult to maintain market share over the next several months.
We are designed to work with the lending mainstream on products that make sense for a broad market of conventional and government loan clients. Another problem is not being ready with the best possible technology to provide the service levels the correspondent market wants and requires. Fortunately, Envoy is renowned for its technology and is recognized year after year for its effectiveness.
HW: Tell us about the team you are building and who sits at the core of the operation?
Hastings: I lead the organization as executive vice president for Envoy Correspondent Lending Division. Todd Cheney, a 20-year veteran of capital markets and operations expert, is senior vice president and chief operating officer. Todd Potter is senior vice president and national sales manager, bringing almost 20 years of experience to his role. Vera Owens, a 30-year veteran in mortgage technology, is our senior vice president of information technology. In addition, we have eight other vice presidents and department managers, each with over 25 years of experience in correspondent lending.
HW: What do you see happening to spreads over the next 12 months and how will the potential for rising rates impact your business?
Hastings: Rising rates are inevitable and will have an impact on origination volume, as we have already seen. We are in a market that is transitioning away from refinances and toward purchases, so it is becoming more important than ever to become efficient in order to lower origination costs. This trend will benefit Envoy Correspondent Lending in the sense that we are a low cost provider. The future belongs to companies that can heighten service while limiting overhead, which requires great technology and Envoy strength.
HW: Finally, how will new compliance rules impact your business? What are you doing to stay on top of compliance, i.e. technology, new software, etc.?
Hastings: Compliance has an obvious and important impact on all lenders. Having the mechanisms in place to deal with the additional challenges of originating to regulators’ specifications is critical, of course. We have designed our systems to accommodate every aspect of the new requirements and provide safeguards for ourselves and our clients. It is yet another way that Vera Owens and her technology team are invaluable to us. Compliance is everyone’s top priority right now, and Envoy is ready.