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1 Size of line: Minimum
2 Size of line: Maximum
3 Personal/corporate/combined net worth requirement: Minimum
4 Annual origination volume: Minimum
5 Willing to train those new to warehouse lending
Gateway Bank FSB
8 Lien position: 1st
9 Lien position: 2nd
11 FHA / VA
4 5 6 7 8 9 10 11 12 13 14 15 16
12 Fannie Mae / Freddie Mac
13 HLTV programs
16 Jumbo residential
17 Mixed-use properties
2M 30M NA/1M/NA 120M Y Y Y Y Y Y Y
Nation's top warehouse bank (Federal Savings Bank), Quick$ale®, off balance sheet (purchase facility), early wires, TPOs
14 Home equity
15 Home improvement
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« tools and tips »
By David Colwell Executive vice president Loan-Score Decisioning Systems
Position Yourself as a Premium Broker
Understanding lenders’ broker-evaluation criteria may improve your pricing and your profit
Today’s wholesale lenders are more sophisticated in the evalu- ation methodologies they use to
segment and identify premium mortgage brokers. Margin compression in
the industry requires lenders to look
at every aspect of their broker relationships to originate profitable business.
In the past, lenders typically evaluated brokers on only two criteria: volume and pull-through. Most of the
larger lenders today, however, segment brokers based on volume, profitability, quality and growth potential.
Understanding and preparing for
the factors that go into each of these
components is critical for mortgage
brokers who want to work proactively
with lenders so that they gain pricing
and service incentives.
Lenders use a number of criteria to
evaluate brokers. In general, volume
and growth-potential criteria are fairly
simple: current volume you sell to the
lender and total volume that you originate overall.
In addition, lenders typically will look
at the type of loans you originate and
compare this to their sweet spots. As a
broker, you should have your historical
and projected volume data broken out
by product type for a lender to review.
Profitability and quality criteria can
vary widely from lender to lender. the
critical criteria that lenders often evalu-
ate include the following:
• Average;sales;profit;per;loan is gen-
erated based on your volume. Do
your best to show lenders that you
can make a consistent profit for them.
(e.g., missing documentation, etc.)
per loan file submitted can hurt
you. If your files are poorly documented, it will cost the lender more
money to review and close your
loan and will thus affect your rating
• Pull-through is the number of files
you lock or submit versus the number of loans you submit that the
lender actually funds. Doing your
best to make sure the deals you
submit are solid increases your
pull-through and invariably makes
the lender look better in front of
• The number;of;disclosure;mistakes
made is a new criterion that many
lenders are tracking. If the lender has
to spend a lot of time re-disclosing
because of broker errors on the initial disclosures, it will notice.
• Number;of;repurchases that a lender
has to absorb with loans that you
submitted. repurchases could be
caused by poorly under written loans
or loans that were refinanced by you
or someone else within a short time
frame that causes the lender to have
to buy back the loan. try to follow
your loans closely throughout their
lifecycle, and make sure you communicate well with underwriter, processor and borrower.
• Risk management evaluates your
financial condition — especially
net worth — and your internal loan-officer compliance-management processes and procedures. Make sure
you adhere to every new piece of regulation out there.
• Lender-platform;adoption is still an
issue with many brokers — and it
drives lenders crazy. Lenders often
decrease their origination costs per
loan by pushing work to their point-of-sale platforms. by adopting their
technology and enjoying the efficien-cies, you will make it easier for your
lender to do business with you.
Show your worth
Lenders’ account executives do not
always gather the data they need to
evaluate and classify mortgage brokers
properly, so you must be proactive.
Successful brokers should have the following information ready when they are
meeting with a new lender or updating
a current lender:
in;the;past;six;months, as well as
overall volume originated for your
company, broken down by program
• Growth plans and volume projec-
tions;for;the;next;12;months. Lenders may offer incentives to keep your
business if they are convinced your
growth is real.
• Past performance related to pull-through and lender-platform utilization. Even more important, provide
the lender with commitment targets
for these areas.
will help you sell the rationalization for pricing incentives upfront, but make sure they are
achievable. Ask the lender what its
sweet spots are and see if you can
commit to providing them volume in
• Lender-improvement opportunities.
these should be discussed last.
Most brokers start with this, beating
the lender up on service and pricing,
which immediately puts lenders on
the bottom line is that the mortgage industry has changed drastically in a short
period of time, and the wholesale-lend-ing channel faces some of the toughest
changes in the industry. those lenders
and investors that are still actively involved in wholesale lending evaluate
brokers far differently than before.
to make yourself a more marketable,
successful broker, know the criteria
used to judge you in the mortgage industry’s new order. today’s lenders are
more selective and discriminating in
who they do business with. be cognizant of this, because what you may not
be doing can hurt you. •
David Colwell is executive vice president
of Loan-Score Decisioning Systems, an
enterprise-class-pricing and automated-under-writing-solutions provider. He has more than
23 years of experience in financial services
and mortgage banking. colwell has a deep
understanding of mortgage-technology solutions and has worked for organizations such
as Portellus Inc., Mortgage cadence, United
capital Funding, Wells Fargo, capgemini,
Arthur Andersen and others. reach him at
(623) 693-1237 or email@example.com.
the company’s Web address is loan-score.com.
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