Residential finance has been a tale of two extremes so far in 2019. In the first quarter, mortgage companies were dealing with significant margin compression and low volume. In the second and third quarters, low interest rates spiked an unexpected refi boom that has strained the capacity across the industry as lenders adjust their staffing levels to account for the increased production.
Nick Pabarcus, executive vice president of wholesale at Stearns Lending, noted, “In the long run, 2019 might be best remembered as the year that mortgage brokers regained their foothold in the industry. Originators are transitioning to the broker model in record numbers, attracted by the product differentiation, service levels and the price position wholesale lending offers.”
Brokers have access to a wider range of products than their retail counterparts, such as non-QM, jumbo, renovation or reverse, and can choose lenders based on underwriting time and overall service. And given the lower cost structure of the broker model, originators are often able to offer very competitive rates to borrowers that in many cases can be more attractive on standard and specialty product lines.
“Some would argue that mortgage brokers have been put in an unenviable position over the last 15 years dealing with change after change,” said Jon McCash, executive vice president national sales at Stearns Wholesale Lending. “Our view is that the mortgage broker is thriving today due to their willingness to accept change and also having an acute focus on the client experience.”
Stearns Wholesale Lending, which is celebrating its 30th anniversary this year, has adapted alongside those brokers, supporting them as valued partners by focusing on their client’s customer — the borrower.
“Our brokers are an extension of the Stearns family and have been for 30 years. As the industry has evolved, we have worked with our brokers to ensure quality production of loans and work diligently to put more options into their hands to better serve their customers,” said Ryan Rathert, senior vice president director of wholesale at Stearns.
Those options include a strategic mix of loan products, innovative tech solutions and best-in-class operational support, making it easy for brokers to grow their business.
A STRATEGIC PRODUCT MIX
Stearns has earned a reputation as the company that knows the wholesale business and closes its clients loans on time.
Stearns offers conventional loans up to 97% LTV with the flexibility to choose between FNMA and FHLMC options, high balance conforming and super conforming, Home Possible and Home Ready. Brokers can take advantage of Stearns’ Smart Start buydown, split premium and single premium MI and transferred appraisals.
For government loans, Stearns has flexible programs that feature FHA loans with 580 minimum FICO, or no-FICO non-traditional credit, USDA with 620 minimum FICO and VA up to $2 million for purchase. Stearns also offers six jumbo programs with LTVs up to 90%, with second home and investor options available.
As brokers look to serve a growing number of borrowers with non-traditional incomes or other issues, Stearns has expanded its non-QM product offerings. Stearns’ Flex Series allows FICOs down to 640, DTIs as high as 55% and derogatory credit as short as 24 months ago.
Chad Schoep, senior vice president of strategic products, noted, “This wide range of products means Stearns can be a one-stop shop for brokers no matter what their buyers need.”
Consumers have come to expect transparent, seamless experiences whenever they purchase something and are often surprised and frustrated by the mortgage experience. Understanding this consumer expectation, Stearns developed its orijin platform to serve as a digital ecosystem that covers the entire mortgage process. The platform allows brokers, borrowers and other partners to collaborate in real-time, so consumers feel connected and informed at every moment.
Stearns’ intuitive orijin platform allows brokers more choices while moving loans more quickly through the process because it involves less human touch. The LOS also allows for more communication points for brokers so that they know where the file is at all times during the process, creating an excellent experience for brokers while creating operational efficiencies.
Stearns has deployed several applications onto the orijin platform, including SNAP 2.0, a digital applications solution that connects all of Stearns’ wholesale and non-delegated correspondents.
In addition, Stearns recently introduced bSNAP, a white-label mobile mortgage app that allows borrowers to complete a digital 1003, eSign forms and documents, snap photos of documents, check loan status and get direct access to their mortgage team.
Over the last two years the company has utilized APIs to connect technologies to simplify the mortgage process, with Work Number Verifications Income, Day 1 Certainty, Verification of Assets, Income Calculations using optical character recognition, e-signatures and much more. Stearns has made the conscious decision to make these tools part of the external client experience.
“We have been focused on making the user experience seamless, and an example of that is through the integration work we’ve done,” McCash said. “If we can improve the process of the mortgage broker or non-delegated seller, we will then have a positive impact on the borrower experience. Everyone wins!”
At Stearns, brokers are central to the mission, and the company’s operations provide the strong support brokers need to focus their energies on growing their business. “Stearns provides options throughout the process to give our broker partners choices. We look at our brokers as an extension of our family and treat them as such throughout our process,” said Teresa Reber, executive vice president of fulfillment at Stearns.
With its non-delegated correspondent channel, Stearns gives brokers the flexibility to choose what works best for them. Stearns allows for dual approval between NDC and broker, so if the client would like to broker certain products and be the lender on others, Stearns supports that.
“If brokers want to migrate to NDC, we have the program for them to make it easy,” Schoep said. “Whether that help is just with the underwriting or if needed, assistance in the upfront disclosure or in CD and closing — we have the platform for you.”
Stearns also provides many different outlets for communication. While the company provides a single point of contact, brokers can also speak directly to the underwriter or the closing team to work through situations that need a little extra attention.Brokers can also take advantage of Stearns’ broker marketing tools to generate personalized collateral at no extra cost.
2020 AND BEYOND
Even with 30 years of experience innovating in the wholsale channel, Stearns is just getting started.
“The growth of the mortgage broker over the last year has been the comeback story of the decade,” McCash said. “Our view is that it would be very reasonable for wholesale to reach 25% market share in 2020, which makes our involvement in the channel very exciting.”
Pabarcus reflected, “It would be hard to argue against the fact that over the last 30 years, no firm has done more for the mortgage broker than Stearns Lending. Our firm was virtually founded on wholesale lending, and through the 2008 financial crisis when many others left the space, we remained steadfast in our commitment to the broker. Stearns Lending continues to innovate the model today and will do so into the future. Exciting times are ahead!”