Last week, Housingwire reported that Ditech Mortgage Corp. is returning to the mortgage market “in a big way.” The company was once one of the biggest names in the mortgage world, specializing in pre-cash subprime lending. When the bubble broke in 2006, it brought big losses for both ditech and for those who invested in the mortgage-backed securities.
When the company announced its plans to come back into the market last week, it revealed its new business plan, which entailed a three-pronged approach. ditech (in all non-formal references, the company goes with a lower case spelling) is planning to build business segments in direct consumer lending, retail lending and correspondent lending with “their 600-plus institutional partners.”
The company’s previous incarnation was built on a different business model that primarily focused on providing direct-to-consumer loans and was known then as a leader in subprime. The bulk of its mortgages were interest-only, low-documentation subprimes, and ditech was a pioneer in offering 125% loans allowing the borrower to borrow more than the sale price.
Now the company has released details on just how it plans to build a base in one of its new areas of focus: correspondent lending. Housingwire Magazine’s October 2013 cover hailed the “return of the correspondent lender”, and now it appears that ditech wants to jump on the bandwagon.
Here’s how ditech plans to offer in its effort to build a business from correspondent lending:
MyCommunityMortgage: MyCommunity products help turn more prospects into qualified borrowers. Features include lower MI costs; 30-year fixed rate, 5/1, 7/1 and 10/1 ARM terms; non-traditional credit and conforming loan limits; 620 credit score to 50% DTI with DU approve/eligible; 95% percent LTV for one- and two-unit properties/90% LTV for three- and four-unit properties; no minimum borrower contribution for one-unit properties; and multiple eligible property types.
FHA Program: Offers flexibility in both ratios and guidelines, features include low margins (two percent) and caps (1/5) for ARM products; low down payments and no reserve requirements for AUS approvals; flexible guidelines for non-occupant co-borrowers; acceptance of 100 percent gift funds; $100 down payments for HUD REO properties; permission of FHA Manufactured Housing existing construction; and more.
Expanded LMPI: Among its many benefits are lower monthly payments due to lower costs; the possibility that borrowers may qualify for larger loan amounts, as well as increased tax deductions; and no mortgage insurance needed at closing. Available loan terms include 15- and 30-year conforming fixed and 15- and 30-year high balance.
Freddie Only: ditech’s “Freddie Only” program features reduced agency overlays for Freddie Mac mortgages and the ability to accept LP findings.
The company plans to offer its institutional partners the ability to price, lock and deliver individual loans through the ditech’s website, including daily distribution of loan pricing with multiple lock windows. It also plans to offer a full suite of production and pipeline reports, updated daily to include purchase advice, suspense reports, post-funding reports, underwriting reports and e-Billing.
ditech also plans to offer “free closing docs and compliance checks; 24/7 access to automated underwriting, with no submission costs and availability for all conforming products; comprehensive staff training resources, including continuing education, live webinars, self-paced courses and personalized training; and a wide range of delivery options, including ratesheet forwards, live trades, AOT and a variety of additional delivery methods.”
John Davis, the company’s director of correspondent lending says that the company is positioned to use its previous breadth of knowledge to build a successful correspondent lending program moving forward. “As well-known mortgage lender, ditech offers a unique blend of capital market expertise, corporate financial stability and a consistent market presence,” David said. “The end result is a broad range of solutions and a delivery platform that are unmatched in the mortgage industry.”