Secondary markets: More investors or fewer?

by MPA18 Aug 2014
By David Lykken
Special to MPA


On my Lykken on Lending radio broadcast, I recently had the opportunity to discuss secondary markets with Julie Messina of CNN Mortgage. One of the surprising facts arising from the conversation was that Julie's company has a whopping 24 investors!
 
So, is it better to have more investors or fewer? The obvious downside is the increased risk. The more investors there are, the more policies and procedures there are for loan originators to be aware of. The increased risk, if you aren't careful, could lead to some devastating oversights.
 
On the other hand, more investors means more opportunities. The more investors you have, the broader your amount of offerings. You'll be able to close more loans for more borrowers.
 
In the end, the important thing is to choose a number of investors that matches the values and capabilities of your organization.

David Lykken is 40-year industry veteran who consults on virtually all aspects of mortgage banking. David hosts a successful weekly radio program called “Lykken On Lending” (www.LykkenOnLending.com) that is heard each Monday at noon (Central Standard Time) by thousands of mortgage professionals.
 

COMMENTS

  • by Pedro | 8/18/2014 10:47:55 AM

    I believe one of the biggest challenges while dealing with a higher number of investors is the overwhelming documentation process. This is a risk that many overlook; yet missing documents can result costly for mortgage originators. Some of these concerns can now be lessen by new technologies such as automated mortgage document sharing platforms than help ease the process while keeping document safe. Some of the most effective ones I have tested so far is Floify ( https://floify.com/ ). It would be great to see if anybody else here has use similar products and what their thoughts on these might be.

Poll

Is TILA-RESPA a good or bad thing long term?