HousingWire recently sat down with AmeriHome Chief Operating Officer and Managing Director John Hedlund to discuss key growth opportunities in the non-delegated channel that lenders may be missing out on.
HousingWire: What are some key growth opportunities lenders may be missing out on, and how can leveraging the non-delegated channel further growth for lenders?
John Hedlund: Non-delegated lending can serve multiple purposes for different types of lenders. For some community banks and credit unions, leveraging the non-delegated underwriting option can simply help them expand their capacity and act as a back office of sorts. And because non-delegated underwriting typically relieves the lender from the underwriting/credit risk, these institutions can serve a broader base of their community.
For mortgage brokers looking to make the jump to mortgage banking, non-delegated lending is the perfect way to build the resume they need on their journey to a fully delegated, agency-approved seller and servicer. As long as they can meet the licensing and financial requirements of the non-delegated correspondent investor, that broker can be the lender – giving them the ability to control their own destiny at the loan level, lose the requirement to disclose premium price rebates, expand their product lineup and be a more powerful recruiting machine.
For established mortgage bankers of all shapes and sizes, and including those community banks, credit unions and emerging bankers, non-delegated lending can quickly expand the lenders’ access to products they might not be comfortable taking the credit risk on. In addition to agency specialty/high LTV products, lenders can gain access to non-agency jumbo and non-QM products and be the lender, not a broker.
HW: What are some risks and benefits of non-delegated underwriting?
JH: While relieved of credit risk, the non-delegated lender still assumes the risk for compliance and misrepresentation-related issues. Different correspondent investors all have different views on this so legal counsel should be consulted when reviewing MLPAs and seller guides. As with growing any new business, there are risks – but there are also rewards in the form of more opportunity for favorable pricing, access to loan products and the ability to be known as the lender.
One key benefit is that much of the additional expense of becoming the lender can be kept as a variable cost – by utilizing an outsourced vendor for the fulfillment of their closing documents and funding, the lenders can continue to originate with their existing staff initially. Once they get comfortable with the responsibilities and requirements that correspondent investors will expect, they can take on more of those duties internally.
HW: AmeriHome launched its non-delegated correspondent channel in January 2019. What have the past two years looked like in that area?
JH: We’ve taken a slow, methodical and purposeful approach to the non-delegated business. The market has obviously been a bit of a rollercoaster and actually helped us to build resilience and strength along the way. Being the third-largest correspondent lender in the country for delegated business, we have the scale, sophistication and support of a large organization to draw on for resources and this has been instrumental in the growth of our non-delegated business.
That said, the customer base in non-delegated really doesn’t care that we’re a big delegated buyer and many of our prospects have not heard of AmeriHome before, so we’ve been stepping up our marketing game and proving our value every day on every loan. We’ve had great success this past year and have built a solid foundation for future growth.