Homeward Residential, formerly American Home Mortgage Servicing Inc., expects $4 billion to $6 billion in loan production from its new correspondent lending business by the end of this fiscal year ending Sept. 30.
President and CEO Dave Applegate describes the company’s decision to build a correspondent and warehouse lending operation in July as an early success story that started with a soft launch in October.
Homeward Residential, which is majority owned by WL Ross & Co., purchased its first loans for the correspondent lending channel four months ago and has $800 million loans in production, Applegate said.
The Coppell, Texas-based company desires to be “one of the top 10 mortgage bankers,” but diversification across platforms remains key to its plan.
The rapid rollout of the warehouse and correspondent lending channel forced the company to rethink its long-term strategy, prompting a name change to Homeward Residential earlier this month to better reflect the multichannel approach.
The new correspondent lending channel has 30 active clients and 50 in the application process, Applegate said.
“I think we are unique here,” Applegate said. “Where we are different is that we already have a $70 billion-plus servicing portfolio, and we have been in this place for a long period of time. The broader process is to build the business around three themes: servicing, the lending segment and our special servicer and subservicing segments.”
“We really want to grow all of those income streams,” he said. “New players coming into the market seem to be more niche-oriented.”
Homeward Residential also expanded its business to assist clients with loan closing services, REO management, home valuation, special servicing, sub-servicing and asset management consulting.
“Our lending business is focused on GSE activity — Fannie and Freddie loan purchases and retention and servicing,” said Applegate. “American Home has a history in non-prime and Alt-A, and we have a business that is very strong in terms of managing default. We also are diversifying our skill set to make sure we are able to care for that prime customer.”
In the wake of the $25 billion robo-signing settlement between servicers and attorneys general, Homeward Residential is enhancing its servicing practices.
“We entered into a voluntary agreement with the State of New York that sets a bar on how customers should be cared for,” Applegate said. “It would be helpful for state and federal governments to reach an understanding on common servicing standards, so all servicers know exactly what the directives are.”
Applegate believes regulators and servicers are getting closer to establishing that kind of clarity.