Update, June 30, 2023: The company that announced its launch as Cornerstone Home Loans in March, issued this statement in June: “Out of respect for the trademark rights owned by Cornerstone Capital Bank and its predecessors for the past 35 years in the ‘Cornerstone’ and ‘Cornerstone Home Lending’ trademarks for mortgage services, including providing mortgage services in North Carolina, Virginia, South Carolina, Georgia, and Florida, we have decided to rebrand our new mortgage services company as Clear Point Home Loans.” The headline and story have been updated with the new name.
Donny Kirby, former vice president of national direct-to-consumer sales at Wyndham Capital Mortgage, spent more than 12 years at Charlotte, North Carolina-based company before leaving to start a mortgage broker shop, Clear Point Home Loans.
At Wyndham, Kirby led the expansion of the lender’s branches from Charlotte, North Carolina into Arizona, Texas, Utah and Missouri. When mortgage rates rose and demand for lower-priced mortgages grew, Kirby saw opportunities in the wholesale lending channel.
“Nothing in the mortgage industry is easy right now (…) With the broker model, you’ve got so many outlets to send these loans to that it’s really easy to find a home for most borrowers. We all know that home affordability is an issue for everyone right now. Just having those additional layers in the retail model really creates strain there,” Kirby said in an interview.
Tech advancements in the broker space, which caught up to retail lenders‘ levels, were another factor that helped him make the transition.
“I think maybe if you look back a few years, the broker space from a technology perspective was lacking, but has really caught up to where retail was (…). Loan origination systems, point-of-sale systems, I think what has advanced the most is the actual exchange of information between the broker and the wholesale lenders,” Kirby said.
As a new wholesale lender, Clear Point Home Loans faces the challenge of making new referral partners and getting the company licensed in other states. Kirby hopes to have a total of 15 LOs and close $50 million in production volume by year-end.
Read on for Kirby’s take on opportunities in wholesale lending, the challenges he faces with starting a new mortgage brokerage shop and how he plans to scale his business.
This interview has been condensed and lightly edited for clarity.
Connie Kim: You had a long run at Wyndham Capital Mortgage dating back to 2011. Why did you decide to start your own mortgage broker shop after spending most of your career at a direct-to-consumer lending shop?
Donny Kirby: I’ve been in the mortgage industry for almost 14 years now, and like you mentioned, the last 12 years have been with Wyndham. I developed a ton of great relationships over that time there. In the last couple years, most of my focus was on growing and expanding the company. We went from having just one center (branch) in Charlotte, North Carolina to building out four different locations across the US.
Going through that experience really gave me the confidence that I could kind of go and do this on my own. I’ve always had a little bit of an entrepreneurial spirit. So opening up a brokerage was kind of always on my mind. I felt like if I was ever going to do this, now is sort of the time to branch out and do my own thing. So it was really a combination of what I focused on over the last couple of years, and then sort of the direction of that company just led me to make the decision that now’s the time.
Kim: I’ve heard retail LOs transitioning to the wholesale side citing fewer layers of bureaucracy than in retail lenders and pricing advantage. What is the upside of launching a mortgage broker shop?
Kirby: Nothing in the mortgage industry is easy right now. My perspective is, you need to have companies that are willing to open up that credit risk profile in order to help your loan officers bring in volume. Not only open it up, but really excel with that clientele and those particular types of products.
One of the challenges that you have on the retail side is you really get boxed in from a credit risk perspective to your company’s appetite at any given time. But with the broker model, you’ve got so many outlets to send these loans to that it’s really easy to find a home for most borrowers.
In a market where every loan counts, that’s a great resource for loan officers to have those outlets. I also think that the retail model is really going to be challenged on the pricing side. We all know that home affordability is an issue for everyone right now. Just having those additional layers in the retail model really creates strain there.
Not only is your loan officer looking to be compensated, but their sales manager and regional manager, and the VP, etc. So it just creates a challenge that I think the broker model solves. We don’t have all those additional layers, and you’re able to be much more competitive in the market where affordability is critically important.
Kim: What changed in the mortgage broker space that makes it easier for retail LOs to come to the wholesale channel?
Kirby: I think maybe if you look back a few years, the broker space from a technology perspective was lacking, but has really caught up to where retail was. Loan origination systems, point-of-sale systems, I think what has advanced the most is the actual exchange of information between the broker and the wholesale lenders.
That used to be a pretty cumbersome process with most companies, and a lot of them have built tech-forward portals that make the process of sharing that information incredibly easy — and that only improves the customer experience.
Kim: What are some of the challenges of starting a mortgage broker shop, especially when the industry is consolidating and rates are higher compared to the pandemic years?
Kirby: When you’re a startup and you don’t have your processes completely ironed out smoothly, I think referral partners will hesitate. If you’re only closing one or two loans a month, they want that customer experience to be perfect.
Whenever you’re new and transitioning from retail to the broker model, you’re learning some of that. You will do everything you can to avoid those hiccups, but in a startup, it’s going to happen. So I think that some of the referral partners have not necessarily been hesitant, but really wanted to make sure that that process is dialed in, and that their consumer doesn’t have a poor experience.
Outside of those things, I think compliance is a challenge for everyone in our business right now. Most of us who come from the sales or origination side, we don’t have a ton of experience on the compliance piece.
Starting your own brokerage, you’re working with the individual states to get the company license. There aren’t a ton of blueprints out there on exactly what to do, so you end up hiring consultants to help you navigate that process.
So those are the two things that I would say have been the most challenging for myself so far.
Kim: Cornerstone Home Loans [now Clear Point] was just approved for business in South Carolina and North Carolina this week. How big is the company?
Kirby: Our first licenses actually were approved on Monday; that was North and South Carolina. So it’s currently just two. My brother is one of the top-producing loan officers in our area. I’d definitely expect some more top producers in the area to come over within the coming months as they sort of close out their pipelines and put themselves in a position to make the transition.
We want to sustainably grow throughout 2023. It’s really about setting the foundation so that, as we move forward, we can have a long and prosperous run. I expect us to have around 15 producing LOs by the end of the year, really taking a big jump into 2024.
Kim: Are the new hires coming from your network? How are you recruiting new LOs?
Kirby: Yes, the majority of the talent will come from my network. Some that I’ve worked with prior, some that I’ve never worked with. But I think sort of what you mentioned earlier, LOs are looking around at their current environment and saying, ‘I think that this wholesale and broker opportunity may be a better channel for me, given some of the challenges that we’re facing on the retail side right now.’
Kim: Are you planning to expand licenses in other states?
Kirby: Yes, so we’re currently in the process with five other states right now, geographically focused in the southeast and the Atlantic. We’ll add five more in the next quarter, and then sort of strategically add depending on where the opportunities are.
In my previous company, we were licensed in 48 states, and some of the talent that we’ll be recruiting, there are certain states that they want to have the ability to continue to originate in.
Kim: I hear about the lack of inventory issues and bidding wars across the country. How is the housing market in South Carolina and North Carolina?
Kirby: So here in Charlotte, we sort of straddle the North and South Carolina border. I think we’re certainly seeing that here in our local market – really low inventory, (and) any desirable home that hits the market, buyers definitely get into a bidding war. The last bit of data I saw on the local market in February was that prices were up 14% year over year.
Where we are seeing some success is sort of in the outer areas of the metro. The realtor partners that we have there seem to have been pretty consistent, even in these more challenging times. I think there’s a little bit lower price point, there’s a little more inventory.
So we’re seeing them stay pretty consistent, but in the Charlotte inner metro, it’s really challenging. Not a lot of inventory, and some of the same things you’re hearing from some of the other larger metros.
Kim: Do you see more opportunity in Charlotte because it’s such a highly sought after market, or are you looking to target business in the outer metros?
Kirby: Charlotte is a hot market, so although we see more consistent business in those areas, I think we’ve historically served less of that market. So from a growth perspective, the outer metros are where we are identifying our growth opportunities.
We’re saying let’s get out and have some conversations with some of the potential partners who work in those areas, some of the builders who are developing. We’re trying to target that [the outer metros] as a new opportunity and to just continue to generate consistent business.
Kim: You mentioned 2024 is when you expect to see business accelerate. What’s your production goal for this year then?
Kirby: Given that we won’t really start funding volume until April and most likely May, I think if we were to hit $50 million this year, I would consider that a win.
It’s more about the foundation and the technology in place to scale in 2024 — and really toward the tail-end of this year as some of those individuals come on board.
Kim: Despite the industry still rightsizing and the elevated rate levels, what kind of opportunities do you see for this year?
Kirby: My honest opinion is, I think there’s still opportunity out there in this market. I mentioned my brother coming over; he funded $5 million last month and in March. I still see top performers across the industry having amazing production months.
I think the key to having success is just like coming in every day and doing the work. I don’t think there’s any secret right now. There’s no recipe; you’ve got to provide more value to your referral partners, you’ve got to be making more calls than our peers, you’ve got to spend more time building your brand on social media and in your communities.
When rates are up, there’s really no shortcut. I see a lot of loan officers out there that are staying active and engaged and intentional every day.