Originators have another ally in the fight for consumers

by Kimberly Greene15 Aug 2019

Wholesale and correspondent mortgage lender Home Point Financial is coming up strong in more ways than one.

Last month, Home Point increased its loan volume by 98.5% from the first quarter of 2019 through the second quarter, outpacing several of the nation’s largest lenders, according to data compiled by Inside Mortgage Finance.

“This is a major accomplishment for our team and for the broker and correspondent business partners we serve,” said Phil Shoemaker, chief business officer at Home Point. “Our goal is to be the best lender for brokers and correspondents. The growth that we’ve experienced shows that our plan is resonating within the market, and it’s really exciting because we’re only getting started. We remain focused on enhancing our platform to empower our business partners and experienced staff to reach new levels of productivity.”

Home Point retains the servicing on more than 95% of the loans it originates, and the company now has over 200,000 customers in its servicing portfolio. Many third-party lenders sell the servicing rights for the loans they originate soon after the customer closes on their loan. This can create confusion and communication challenges for borrowers, and disrupts a developing relationship in an important transaction.

Earlier this year, Home Point Financial did an experiment, which revealed that consumer-direct lenders recapture 56% more customers than mortgage brokers. But a big mistake that brokers and lenders have made in recent years has been getting into tug-of-war battles over customers, Shoemaker said in a Facebook Live interview. The truth is, they don’t belong to anyone.

“You have so many people that are involved in that process that over the years it has become somewhat murky as to whom that customer belongs to,” Shoemaker said. “That’s the flaw that most people make to start, because the customer really doesn’t belong to anyone. It’s really about the customer’s choice.”

Home Point views the independent mortgage broker as an expanding channel and has chosen to align with that side of the market, using independent originators as their distributed network and bridging the gap so that they can assist in making originators more effective at retaining their mutual customers. This is particularly true for the purchase segment of the market, which Shoemaker says is heavily based on physical distribution of people that are out in the field and who have nurtured relationships and networks. Brokers dominate in this space, while consumer-direct companies are much better with refi business. Home Point wants to empower brokers with tools that they wouldn’t typically be able to access because they’re only available to large-scale services, and they believe that the synergy that will come from that partnership in terms of mutual recapture is better than what a servicer would typically receive.

This idea is behind their Customer for Life program, which launched in July. In the first two weeks of the program, Home Point returned about 70 borrowers to their original broker. Going forward, Home Point’s goals are twofold: to provide the best possible service to the independent originator, and to provide the best possible servicing to the customers that brokers are “trusting” them to service so that both parties can mutually benefit from the customer retention, since they worked so hard to get them in the first place.

“Our business partners are trusting us with their customers, and we understand that our role as the servicer has a huge impact on their reputation and ability to earn repeat business” said Willie Newman, president and CEO of Home Point Financial, in a statement. “It is for this reason that we are building out an experience that will support the customers’ entire homeownership journey and will create a stronger relationship between Home Point, the customer and our third-party partners. Ultimately, we intend on working with our partners to create customers for life.”

Because Home Point retains the servicing on a majority of its loans, customers are already reaching out to them. Eventually, Shoemaker said, Home Point wants to collect application details from those borrowers for their next transaction, and get their permission to send it to the original originator. It really is about the borrower’s intent, he said, and borrowers predominantly want to return to the person who helped them through their first loan.

“Speed, value and certainty equal trust,” Shoemaker said in the interview. “If we can build that trust, we can help create that retention because that consumer is not thinking about [other lender's] Super Bowl ads. They’re thinking about the person that originated their loan and the person that services their loan, and if we’re partnered together, that’s an unstoppable thing.”

Home Point believes that the mortgage industry is still a relationship business; it’s stressful and personal, and people genuinely want to deal with professionals in their local market who understand the experience and who can provide counsel.

“I think that’s the side that’s going to win. That’s the bet we’re making and, unlike other companies out there, we are positioned to truly create that connection that is competitive against these large-scale consumer-direct shops,” Shoemaker said.

Home Point was founded in 2015 and employs over 1,250 people nationally and is on pace to originate $20 billion in loan volume this year, roughly double their volume from 2019. Through the six-month mark of 2019, Home Point is ranked as a Top-25 overall lender in America, coming in at No. 23 with loan volume of $7.2 billion.