Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with John Hedlund, managing director of the correspondent lending division of AmeriHome Mortgage Company, to explore his strategy for reaching underserved borrowers.
HW: AmeriHome only went live with its correspondent division in April, and already has 30 clients and funded almost $50 million in May. What is the secret to that kind of quick growth?
Hedlund: I believe it all starts with the team we’ve assembled; they are well respected and experienced in the mortgage business — whether that’s in sales, operations, capital markets, risk management or shared services. We have a team of seasoned professionals in the correspondent business and that’s enabled us to move quickly, leverage previous relationships and make it work with quality and service. We understand mortgage bankers – our sellers - want their correspondent to price loans competitively and consistently, have a wide range of products and get their loans purchased quickly and smoothly.
HW: It's a crowded marketplace. What makes AmeriHome’s correspondent division different from others already out there?
Hedlund: Our strategy at a high level is five-fold: have the right people on your team, partner with relationship-driven clients, price your product competitively and consistently, deliver outstanding client service, and lastly — key in this market where the majority of national correspondent lenders are restricted in their product offerings — develop non-agency, innovative products, expanding sellers’ market size and revenue opportunities (not to mention giving their sales force enhanced products to compete).
HW: Any examples?
We just went live with our non-agency – Expanded Program. Key features include 600 and above credit scores, up to 83% LTV, ability to finance points/fees and requires only two years out of bankruptcy or foreclosure. Our research indicates a significant number of qualified borrowers fit this product who are currently unable to access credit.
The other product we’ve scheduled for release in July is our Core Jumbo (fixed and ARM, with an interest-only option). The IO makes these non-QM, which currently makes this a fairly scarce commodity to the majority of mortgage originators and borrowers.
HW: What about the risk involved in non-QM loans?
Hedlund: A lot of people are nervous about non-QM loans. First off, we only do responsible, high-quality lending — that is foremost in our minds, policies and procedures. However, we don’t believe non-QM necessarily equates to low-quality lending. For example, in the jumbo loan space, there are a lot of borrowers underserved and deserving of broader mortgage options (who definitely have the ability to repay). Our Core Jumbo IO is a 680 plus FICO loan, requiring solid reserves, broad credit history and enhanced appraisal reviews. For example, take a physician who has a significant income, good credit, assets and reserves but wants to have an IO option for investment purposes. We don’t see these loans as riskier than QM counterparts. We want to understand the borrower, their credit, income profile and ability to repay the loan.
HW: With these types of loans in your portfolio, are you looking to be just a niche player on products?
Hedlund: Not at all. We will be a full-service correspondent lender and mortgage company. However, in a crowded market with limited volume, we also understand you need to offer more to your clients, so we will always be focused on finding ways to bring additional value to our business partners.
HW: What kind of feedback are you getting so far?
Hedlund: It’s been incredibly positive. We are aligned to what mortgage bankers are looking for, that’s what we are able to deliver and our commitment is to continually improve in every area. We get that we’re new, but that just makes us try that much harder. Very positively, we have been able to tap into one of the largest mortgage markets for top talent (Los Angeles, San Fernando Valley and Ventura County) to hire high quality people who want to be in the correspondent business and help clients.
What’s next for AmeriHome’s correspondent division?
Hedlund: While our objective is to be a significant player in the national correspondent market, in the near term we are focused on expanding our client base across the U.S., refining our processes and procedures as we scale and becoming a trusted and valued partner. To support this plan, we are continually looking to add high-caliber correspondent sales professionals. We plan to become a strong relationship-based correspondent lender with sellers coast to coast.