by Sanjiv Das
There is something not quite right about the term “non-bank.” It refers to financial institutions that are not banks but make loans to borrowers or offer a range of other services. There are many entities that can be classified as nonbanks, from insurance companies to leasing companies. It can also refer to the type of company of which I am the CEO. Caliber Home Loans is the second largest nonbank home lender that provides mortgages to home buyers. Considering the fact that nonbanks originated 53% of mortgages in 2016, it’s fair to say that companies like Caliber Home Loans and our competitors have arrived. So much so that our industry deserves to be called by a new name.
The label “non-bank” just isn’t descriptive enough for the value that we provide homebuyers. It’s so broad that it leaves room for anything that’s not a bank: a media company, traffic cone, or a purple potato. I suppose the Trinity river bank, near where I live in Dallas, wouldn’t qualify because it’s also well … a bank. I used to work at a bank, serving as CEO of CitiMortgage during and after the credit crisis. Naturally, I referred to myself as a banker, as did my colleagues. But I shy away from saying that I’m a “non-banker” because I don’t usually define myself by what I’m not. I also don’t want others to think as a “non-banker” that I am anti-banks.
The “non-bank” phrase isn’t just lacking in imagination. It’s also a missed opportunity for those of us who work in this industry. Lending money to buy a home represents a significant moment in the lives of our customers. Companies like Caliber Home Loans and others are providing the financing so that millions can take part in the American Dream. Of course, obtaining a mortgage can involve a lot of paperwork and due diligence on the part of both the borrower and lender. But ultimately there is a long relationship (sometimes 30 years) that’s being formed between both parties. It seems inadequate to call the companies who make the loans just a “non-bank.”
I suggest that we in the industry describe ourselves by who we are and what we do. Here are a few suggestions of how we could collectively refer to our companies: Mortgage Specialty Lender (MSL), Housing Specialty Lender (HSL) or Core Housing Lender (CHL). Maybe we could even inject some poetry like American Dream Helper (ADH). I hope you see how the industry could re-brand itself and, in turn, more adequately describe what we do.
This re-branding or re-categorization might even educate customers who are shopping for mortgages. Say they are evaluating their options and they see two groups of lenders: (1) banks and (2) Core Housing Lenders. “What’s the difference?” they may ask. Instead of loan officers saying, “Well, we’re like a bank except we aren’t…” they can say, “The only thing we do is home loans. It has our total focus.” Because Core Housing Lenders (CHL) are laser-focused on providing and servicing home loans, we can provide an enhanced client experience by having a high-touch relationship with our customers. By adopting a more descriptive term, perhaps we can win more mindshare and eventually market share of our customers.
Plenty of “non” entities have been re-cast. Non-profit organizations are sometimes called mission-driven or purpose-driven. A nonfiction book can be known more descriptively as a memoir, history, or biography. Eventually, I hope more will come to see the term “non-banks” as a non-starter.
Sanjiv Das is the CEO of Caliber Home Loans, the third-largest non-bank lending corporation in America. Previously, he was the CEO of Citi Mortgage from 2008 to 2013.