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 Terri Davis, senior vice president of correspondent lending at CMG Financial, to discuss the correspondent space, and what an inspired workplace looks like.
Q: How is CMG meeting the challenges of this market, including compliance?
A: We have struggled, and our sellers have struggled, with the most cost-effective way to implement the broad strokes of compliance requirements — to do our business the right way. The number of regulations has quadrupled in the last five years as far as implementing compliance and QC protocols for agency demands. We want to help protect our clients from making mistakes so we run a full compliance audit on every loan we purchase. We have a great dialogue with our clients and we are empathetic to the increasing cost and time it takes to originate loans to fulfill regulatory compliance. We want to be supportive and helpful so that our clients get it right.
Q: What differentiates CMG in terms of customer service?
A: A lot of correspondent investors talk about providing service, but we really are committed to it. We provide a dedicated client liaison and their team to support the clients of each of our regional sales managers and to provide the speedy purchase of their loans. It’s a very personal approach to providing support to our clients. Our client liaisons build trust and rapport, and facilitate common understanding leading to more efficient operations between both of our companies.
Q: CMG just launched a jumbo product. What kind of reception have you had?
A: We’ve had a very successful launch of our jumbo product, and we intend to expand our jumbo offering to include some non-QM loans. We want to provide solutions for the self-employed borrowers who have a strong asset base but need flexibility around DTI. We also think there’s a great need for a non-warrantable condo solution — there’s considerable demand in places like Las Vegas, Chicago, Los Angeles and Florida. Resort communities in parts of Colorado, Hawaii and Florida are also looking for condo solutions.
CMG has a history of product innovation — we brought our Homeownership Accelerator to market in 2005, then brought that back as the All-In-One program in 2009. The All In One home loan is a unique, patented product that significantly reduces interest costs for borrowers. Our intent is to innovate how mortgages are managed, and that’s highly reflected in the proprietary loan programs we offer. We will continue to listen to our client’s needs and adjust our model to support their growth and profitability. It’s our intention to be agile and responsive to the market and our clients.
Q: What are some trends you’re seeing right now in the industry?
A: 2014 has been a bit of a surprise — I don’t think anyone would have predicted that the winter season and unseasonably cold spring across much of the country would have impacted originations as much as it did. The third quarter is proving to be the break-even period for a lot of lenders who suffered a tough first half. In times like this, every basis point matters and we see our client base changing up their execution options to improve their profit margins. As a result, we have seen demand for our loan-level bulk execution grow considerably over the last several months and we recently launched our Direct Trade platform in response to the demand for more mandatory execution options.
Expansion is another theme I see across our client base. I travel all over the country and enjoy listening to our clients talk about their expansion strategies. Some of them are very creative and most are having success expanding retail or pushing into TPO. I have noticed that the clients that are most pleased with their growth this year have something in common that is almost hard to describe – I think it is their culture. Their leadership tends to be very engaged in setting a vision and articulating a strategy. The staff we encounter from executives to post closing and operations, all identify with how they define themselves and their mission. The story is often very employee-centric. They believe in the company and it shows in tangible and intangible ways.
Q: Speaking of culture, CMG Financial was just recognized as one of the Bay Area News Group’s Top Workplaces, an award it also won last year. How do you think that filters down to your clients?
A: I have known folks in my career that do not buy into the hoopla of culture and establishing an esprit de corps, but I see the difference it makes among our clients and frankly for CMG. I am confident that the way we approach our clients is a direct reflection of who we are as a company; agile, warm and approachable, operating with a high degree of integrity. We never take ourselves too seriously, and we are knowledgeable, passionate, and fun!
Q: What does the future look like at CMG?
A: One of the things we’re looking at is how we can balance the perceived demand of expansion into non-QM loans before the waters have been really tested in terms of litigation. Our focus will be on providing smart solutions to the right consumers — not expanding the box in terms of risk, but finding unique products that support clients and consumers in non-QM loan types. In terms of correspondent lending, CMG continues to see correspondent as a critical part of our growth. We are committed to continuing to grow our share of the correspondent market.