BOK Financial, a $26 billion regional financial services company, intends to aggressively, but methodically, expand its correspondent lending channel within a year.
The Tulsa, Okla.-based company plans to increase the number of states it performs correspondent lending by more than 50% to 40 by mid-2013 from 26 today. Its correspondent platform, which focuses on depository institutions such as banks and credit unions, began 16 months ago with two regional sale managers. The company is looking to take the platform to Texas, Minnesota, Colorado, Missouri and Tennessee.
BOK buys about $40 million a month from smaller correspondents. Next month it sees purchases rising to $50 million a month and then up to $175 million by next summer.
“Our plan is to continue expansion into additional states and add additional sales people to manage those new relationships,” says Robert Ross, head of BOK’s correspondent channel. “We’ll continue to work with banks and credit unions that are closing and funding loans in their own names.”
The company just hired former Fannie Mae executive Elliot Salzman as its correspondent operations leader. Elliot ran due diligence on loan securitizations bought by Fannie.
Salzman says he sees the correspondent industry consolidating. “Some of the bigger players like PHH (PHH) lowered their correspondent volumes,” he says. “They’re going to back out of the space so there’s definitely room for us to pick up some of that slack.”
Larger lenders are phasing out lower net worth and volume counterparties, creating opportunities for smaller players like BOK to grab their business.
Other companies such as First Guaranty and PennyMac Mortgage Investment Trust are also boosting their correspondent lines. First Guaranty’s first quarter was one of the most profitable in the company’s 30-year history. Andrew Peters, the company’s chief executive says its corresponding lending will grow over the next six to 12 months.
“All the old players who used to be in wholesale are now opening up new wholesale shops and delving into correspondent and really trying to ramp up, creating more competition,” Peters says.
BOK, which services 100% of the mortgages it originates, refers its correspondent borrowers back to its correspondence when the former wishes to engage in a new transaction, which Ross says is a unique thing to do in the business.
“That has resonated very well with the prospects of clients that have begun doing business with us,” Ross says.