Home Point Financial CEO: AIME is single driver of wholesale market share

Mortgage & Real Estate

Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, Chairman of the mortgage broker trade group, the Association of Independent Mortgage Experts, Anthony Casa, sits down with William Newman, the CEO of Home Point Financial, where their lending business is booming.

Anthony Casa: Home Point Financial is one of the fastest growing nonbank lenders. How has the broker movement aided that growth?

William Newman: Home Point Financial started in 2015 with the intention of becoming a top 10 lender and servicer, but we didn’t know where the greatest opportunities would be to grow. Therefore, we invested in all origination channels and worked to see what presented the best long-term opportunity. In 2018, we saw growth exploding in the broker market and decided to exit retail lending and expand on our investments into independent mortgage brokers.

Last year, I attended the inaugural AIME Fuse National
Conference in Las Vegas and experienced the energy, perspective and attendance
while being present at the event. It reminded me of the 1990s when brokers grew
their market share significantly, confirming my decision to heavily invest into
the broker channel. A part of my personal philosophy is that people want to be
a part of something. Lending operations can feel isolated and by definition you
need to be able to overcome that obstacle in order to be successful. AIME is a
new movement which brings people together as one community. With this movement
comes rallying and comradeship among brokers unlike anything I’ve seen before.

Casa: What’s the next step for growth with Home Point? Do you expect you can keep putting up those big numbers, even in a declining market?

Newman: In 2019 alone, Home Point is funding four times the volume in the TPO segment than we were funding at the beginning of the year. It would be flawed to expect we could maintain that level of growth. However, we do have a number of growth opportunities that we intend to execute on. For example, Home Point only covers about 15% of brokerages today, meaning there is significant room to grow our reach.

We are also continually focused on improving the experience for both the broker and the consumer. While oftentimes those in our industry think you have to pick one or the other, we don’t believe that’s the case. At Home Point, we believe it needs to be a mutually beneficial relationship for everyone involved. We continue to improve the workflow, interface, technology and every aspect of the origination process. In order to continue to see success even in a down market, our strategy is to focus on the long-term relationship with both our broker partners and our customers. 

Casa: How has your partnership with AIME benefited Home Point Financial in terms of exposure and volume increase?

Newman: Through membership with AIME, mortgage brokers have been unified with one voice and one mission. This is something they didn’t have in the wake of the housing crisis, when they were pummeled with increased scrutiny and regulations, catching disproportionate blame for the financial crisis. Unlike other groups such as Realtors who had the National Association of Realtors, brokers didn’t have anyone advocating for them. But now everyone is involved, working together and becoming more motivated to speak out. This brings more attention to the broker segment and educates the public about what brokers do. The more that our unified message is delivered, and the benefits that mortgage brokers provide is easier to understand, the greater the increase in the number of independent brokers and their market share.

We’ve grown our exposure to brokers and the number of
brokers we do business with by more than 50% in 2019, largely due to our
partnership with AIME. The exposure that it gives us with Phil Shoemaker and
others in our organization being involved, attending conferences and having the
opportunity to speak with brokers and find out what their needs are, has been a
significant driver for growth at Home Point Financial.

Casa: How is the game changing for brokers from the time of the crisis, to a year ago to next year or even 10 years from now? What should we ready ourselves for?

Newman: When I first came to the mortgage industry, broker market share was nearly 0%. But as time progressed, I began to see brokers slowly take over, reaching more than 50% of market share before dramatically dropping after the financial crisis. But as brokers face off with the blame following the crisis and lost market share as regulations increased, it did bring a positive impact to the broker segment. Because regulations were established for brokers so early on in the process, they could quickly begin to understand the changes needed for their business in order to survive the crisis and eventually come out ahead of the market.

After a number of years, we are really seeing that benefit in order to maintain the momentum and brokers will need to continue to professionalize as they look to grow market share at a sustainable level. Optimally, brokers evolve to the point where they keep customers for life. This would result not only in sustainability for brokers as a segment, but as a potential to create franchise value for individual brokerages. A proxy for this are how insurance agencies operate.

Casa: What advice would you give to young independent mortgage brokers just starting their careers? Is there a secret to success in the lending business?

Newman: If I’m talking to myself, I’d say don’t be such a jerk like I was in my early career. I learned that through fatherhood! But now, looking back at my time in the mortgage market, there are three things I would say to try to help those who are just starting out in the field. The stronger that the participants in this industry are, the better off we’re going to be. Here are the three pieces of advice:

Who you work with is more important than what you do. So many young people coming out of college get fixated on a particular role or company, but it’s more important to look at who you will be working with. I was lucky enough to find a mentor that taught me the entire business in a couple years. Without that, I wouldn’t be where I am today.Always be learning. Just when you think you know it all, you will find something you don’t know. So talk to people, ask questions and always try to expand your knowledge base. In everything you do, understand the impact it will have on others and most importantly, specifically the customer. Even the most back-end jobs will affect your team and the customer and we all should conduct ourselves accordingly.