Carrington looks to attract brokers with new loan processing service

Focused on government and non-QM loans

California-based nonbank lender Carrington Mortgage Services has invested in boosting the growth of its wholesale channel, with the latest announcements including a new loan processing service and plans to increase the sales team.

The attention to broker shops comes at a moment in the mortgage industry when the retail channel is losing origination volume, particularly refinance volume, due to higher rates.

“We put a lot of effort and energy into developing a program to help brokers grow. And we are hoping that with this program, we will be able to attract more brokers to work with us,” Jeff Gillis, executive vice president for operations, strategy, and governance at CMS, told HousingWire.

CMS focuses on government – Federal Housing Administration, Department of Veteran Affairs, and U.S. Department of Agriculture – and non-qualified mortgages (non-QM) loans. In February, the company announced a service called ProcessIQ to assist brokers in processing these complicated and time-sensitive loans through their pipelines more easily.

The ProcessIQ team handles logistics and works directly with the borrower, but brokers manage all licensable activities. CMS said the service costs $200, added to the underwriting fee, which is $699 in most states for government loans and $750 for non-QM. According to Gillis, third-party processing companies charge $1,000 for the same service. The service is available only for full-doc government and non-QM loans.

“Many brokers don’t have the staff or the processing expertise to devote to the more time-intensive government and non-QM loans. Sometimes, they have to turn down these loans, or put them on the back burner, to focus their employees on conforming loans that are a little bit easier and faster to originate,” Gillis explained.

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To support the wholesale channel, the company is also increasing its salesforce. CMS has 70 account executives and expects to reach 200 over this year. The mortgage lender is attracting professionals from the industry and developing its account executives and loan officers in-house, selecting people without experience in the mortgage industry.

Gillis said the wholesale channel represents about 40% of its origination volume, but the company goal is to increase the share by building lasting partnerships with brokers. “If we grow retail and wholesale, it’s a win-win. But certainly, I think that there’s an opportunity for us to grow our footprint on the wholesale side. I’d love to be at 50-50% or maybe even 60-40%.”

According to Inside Mortgage Finance, CMS is the 24th-largest mortgage servicer in the country. In 2021, the company’s servicing portfolio increased 6.8% compared to the previous year, to $68 billion. Origination data is not available.

The company targets underserved borrowers, such as those with lower credit scores, higher debt ratios, or who are self-employed. Gillis believes these borrowers were left behind during the refi boom but will gain attention from brokers and other lenders in the current competitive environment. “We expect to see some lenders jump into our space a bit,” he said.

Gillis said he expects the non-QM market to double in 2021, to $50 billion in origination volume.

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