Speed. Pricing. Flexibility. Each of these factors can benefit borrowers who work with independent mortgage brokers.
This business model is growing, too. About one in five U.S. home loans are now originated by brokers, a share not seen since the Great Recession. Much of this business is being done through the wholesale lending channel. Nonbanks originated 68% of the nation’s mortgages last year, an increase of nearly 10 percentage points from 2019 and the highest market share on record.
These trends are reflected in this year’s Scotsman Guide rankings of Top Wholesale Account Executives and Top Mortgage Brokers, which are detailed on the next four pages. These rankings, which are based on verified production reports from 2020, show that historically low interest rates and a surge in borrower demand combined to boost business across the board.
In 2019, only two of the publication’s Top Wholesale Account Executives broke the $1 billion mark, but there were 11 who did it in 2020. The repeat champion in this category, Robb Fordham of loanDepot Wholesale, originated nearly $1.77 billion across 3,903 loans, boosting his volume by 54% year over year.
Christopher Calderon of LoanStream Mortgage placed second at $1.53 billion, followed by Tracy Evans of Caliber Home Loans Inc. at $1.35 billion. The lone newcomer to this year’s top five is Homepoint’s Jenny Gibbons. She placed fourth and moved up 14 spots from the year before by originating 2,962 loans for $1.34 billion. Gibbons increased her dollar volume by 219% compared to 2019.
Amazingly, the cutoff point to be ranked among the 150 Top Wholesale Account Executives in 2021 jumped to $211 million, a figure that would’ve been good for 65th place a year ago. The aggregate volume of $73.7 billion for these 150 salespeople in 2020 breaks down to about $201 million per day or roughly $8.4 million per hour, 24 hours a day.
Similar exponential growth can be viewed in the Top Mortgage Brokers rankings. Last year’s winning volume of $583.9 million was exceeded by three people. The new No. 1 is Thuan Nguyen of Loan Factory Inc., who quadrupled his 2019 volume and topped $2 billion on 5,216 closed loans.
Second place went to Mike Roberts of City Creek Mortgage ($1 billion). Three California-based brokers rounded out the top five: Mark Howard Cohen of Cohen Financial Group Inc. ($905.2 million), Nathan Kowarsky of Clear Mortgage Capital Inc. ($394.3 million) and Shashank Shekhar of Arcus Lending Inc. ($364.5 million).
Last year’s refinance-heavy market had a clear impact on the Top Mortgage Brokers list. No one in the top 50 had a purchase-loan share of more than 47% and many brokers had shares in the single digits. This was a stark contrast to the 2019 production year. (NP)
Contributors: Arnie Aurellano (AA), Jim Davis (JD), Neil Pierson (NP)
Verification: Krista Lowry, Brian Warr
Robb Fordham, No. 1 Top Wholesale Account Executive
For the second year in a row, loanDepot’s Robb Fordham topped Scotsman Guide’s rankings of Top Wholesale Account Executives. He and his team closed 3,903 loans for $1.77 billion in loan volume last year, up from $1.15 billion in 2019 or a 60% year-over-year increase.
“Last year was a turbulent year with COVID-19,” Fordham said. “To do the numbers that everybody did in the industry was remarkable, especially with capacity constraints.”
He credits his team, including account managers, underwriters and closers, for the effort. Most of these people have been with him for more than a decade and he said his broker base trusts this consistency.
“That’s what (the brokers are) looking for,” Fordham said. “It’s consistency on price and service — it’s a combination of the two — where you’re going to get the loans done and it’s going to be done with the least amount of pain, if you will.”
Fordham said the independent mortgage broker model is irreplaceable and he expects it to continue to grow in the coming years. He also said his team has been fortunate in that 75% to 80% of its broker partners return to loanDepot, an impressive share considering the options available to them. He’s also happy to see that mortgage lenders both large and small had such phenomenal production in 2020.
“We want the competition between lenders because, at the end of the day, the borrowers are getting the best possible product,” Fordham said. “It’s just great to see the industry grow. And I hope that we continue with another strong year. I want all of our competitors and those teams at (loanDepot) to continue to be successful.” (JD)
IMB production and profits take a dip
The average per-loan profit for independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks was $3,361 in first-quarter 2021, according to the Mortgage Bankers Association (MBA). This was a decrease of 10% compared to the prior three-month period but still represented the most profitable first quarter for IMBs since at least 2008.
The MBA also reported that production was down on a quarterly basis. In Q1 2021, the average IMB closed 4,879 loans, about 170 fewer loans than Q4 2020. This translated to an average sales-volume decline of about $30 million compared to the prior quarter. In a reflection of ongoing home-price increases, however, the average loan balance reached a new record high of $288,551 in the first quarter.
The cost to originate a loan remains much higher than its historic norm since the Great Recession. These expenses reached $7,964 per loan in the first quarter, about 20% more than the average cost since mid-2008. Meanwhile, productivity per employee declined from 4.2 loans per month in fourth-quarter 2020 to 3.6 loans per month in first-quarter 2021. (NP)
Thuan Nguyen, No. 1 Top Mortgage Broker
In such a demanding lending landscape, how does Scotsman Guide’s No. 1 Top Mortgage Broker make sure his company keeps its pipeline moving swiftly and smoothly? Thuan Nguyen of Loan Factory Inc. took a cue from a different industry.
“Ninety-nine percent of the brokers out there, they have a dedicated processor to handle a loan from A to Z,” said Nguyen, who cleared $2 billion in brokered loans last year. “But for me, I break it down into many steps, like a manufacturing assembly line.
“We have one person do the setup. One person does the review. One person does submissions. One person does conditions. One person does closing. I have an assembly-line model that can process loans for me fast.”
It’s an idea that he formulated from lessons learned during previous mortgage booms and a concept he successfully implemented thanks to planning ahead.
“That’s why we always have extra staff — more than what I need. The worst thing to ever happen is you don’t have enough staff to handle the business. During the peak periods, everyone’s busy and everyone’s paid well. It’s very difficult to hire an experienced processor. It’s very difficult to keep them and to train them. It takes a long time. So, we switched to the assembly- line model so we can hire easily and train quickly. [New hires] can contribute and we can handle the big volumes.” (AA)
Uncertainty continues in quest for GSE reform
Shortly after the U.S. Supreme Court ruled this past June that the leadership structure of the Federal Housing Finance Agency (FHFA) was unconstitutional, the Biden administration appointed Sandra Thompson as the agency’s acting director. Her predecessor, Trump administration selection Mark Calabria, had been leading efforts to privatize Fannie Mae and Freddie Mac.
What the change in leadership means is still unclear. Congressional Democrats have voiced concerns about releasing the government-sponsored enterprises (GSEs) from their conservatorships. But several key steps toward privatization were undertaken during Calabria’s tenure. Last year, a capital-framework plan was announced, calling for the agencies to hold a combined $280 billion in reserves, and the GSEs retained Morgan Stanley and JPMorgan Chase as financial advisers.
In the short term, however, the FHFA announced one change that will benefit mortgage lenders. Effective last month, the agency dropped its adverse market refinance fee of 50 basis points on many refinances eligible for GSE acquisition. Fannie and Freddie were projected to shatter their record (set last year) for gross issuance of mortgage-backed securities. The $1.27 trillion in issuances through the first five months of 2021 were 84% higher than the same period last year, the Urban Institute reported. (NP)
