Friday Funding is a HousingWire web series profiling the lending segment in depth, and highlighting the operations and the people that make this sector tick. In the latest installment, we sat with Lisa Schreiber from New Penn Financial to learn how the firm is building consistency throughout the market.
HousingWire: Who is your target customer and why are they a good fit for your business model?
Schreiber: Our target client is a small to mid-sized mortgage banker or community bank that is looking to expand their product line and borrower options but wants the option for us to underwrite and CTC (clear of conditions) their loan prior to purchase to lower their risk.
HW: How does lending fit into your overall business strategy? In other words, what other lending divisions do you have, i.e. warehouse, wholesale, ect.?
Schreiber: We are a mortgage banker with financial strength and robust channel diversity that covers, Direct to Consumer, Retail, Wholesale and Correspondent lending.
HW: What do you see as the greatest challenge(s) your clients face today?
Schreiber: Regulatory demands and changing market environments always bring disruption. Today our clients are looking for product options and investors that can help them grow their purchase volume. We see this as strength as we align with our lenders on unique product options to qualify more borrowers plus pricing and service commitments to close quickly.
HW: What made your firm decide to ramp up its correspondent division?
Schreiber: Beyond the impact of new regulations, there has been a gap between the big bank offerings and their service levels and what a mortgage banker with capital and ability to develop product can provide. Correspondent offers New Penn an additional channel to attain quality volume at a low cost to produce.
HW: How broad of a market do you serve today and what does the next 12 months look like from an expansion standpoint?
Schreiber: We are in 46 of the fifty states with 2 pending. We are growing our sales teams to incorporate both high level outside and inside sales and support teams.
HW: There have been a lot of new entrants into the correspondent market over the last 12 months, what is going to be the key that helps your firm rise above the rest?
Schreiber: New Penn is uniquely positioned; as we are securitizing our loan production we can look to develop product for the marketplace. We are not limited to agency or as a pass through to larger institutions. This will enable our client base to have a broader spectrum of product options to meet more borrowers’ needs.
HW: With the increased competition in the correspondent arena, what do you think is the single most common mistake you see other correspondents making?
Schreiber: There is a wide variety of correspondent lenders, some are small and a pass through with limited capabilities others like the big banks are large and come in and out of the market. Our goal is to consistently offer products and options to our client base no matter the environment.
HW: Tell us about the team you are building and who sits at the core of the operation?
Schreiber: We are lucky enough to be in the Philadelphia area where there are seasoned and knowledgeable correspondent operations and sales teams who are known to our growing client base from past interactions. This gives us a leg up as there is an instant credibility we are able to achieve when bringing on new clients.
HW: Correspondent lenders are paying a high premium for loans. What do you see happening to spreads over the next 12 months? How will rising rates impact your business?
Schreiber: There is little doubt that spreads will tighten as the market shrinks. We are very focused on gaining efficiencies in our processes to quickly purchase high quality loans from our lenders. Additionally we see products like ARM’s and LPMI as good options for borrowers in a rising rate environment.
HW: Finally, with all the new compliance and regulation rules coming out, how will new compliance rules impact your business? What are you doing to stay on top of compliance, i.e. technology, new software, etc.?
Schreiber: We have a terrific legal and compliance team at New Penn who are on top of everything that is occurring in the industry. Compliance is our top priority and takes precedent in our development.
