The market is offering lenders a wholesale lending opportunity that will allow them to continue to grow in a slowing market.
One of the nice side effects of a return to Non-QM liquidity is that it opens up the door for lenders who are looking for a new wholesale lending opportunity. As more investors flood into this part of the business, lenders have the opportunity to create new divisions that can originate these loans, either on a traditional wholesale basis or as a correspondent.
Scaling a mortgage lending enterprise is no easy task, especially if you depend solely upon direct lending. Going wholesale opens up a whole new level of opportunities for growth. In a year when experts are all predicting lower loan volumes overall and significantly less refinance business, this could be the quickest path to growth.
Success depends upon a number of factors. Broker recruitment is high on that list, but brokers will always go where the product is as that’s the only way to serve their borrowers. It adds another layer of complexity for the legal and compliance departments, but it’s nothing they haven’t seen before.
The biggest factor is likely to be technology. I wrote recently about how our integrated document management system is making it easier for lenders to perform due diligence on the loans they buy. Having access to such a system built into your LOS can streamline that process and make wholesale lending significantly easier and more profitable.
Naturally, there is a lot that goes into a successful wholesale lending operation, but the rise of Non-QM lending, fueled by an increasing number of seasoned investors and coinciding with a significant falloff in agency production and refinance business is the writing on the wall.
To maintain momentum and continue growth, many lenders who have not previously participated in the wholesale lending business may enter the business this year. Non-QM loan products will make it easy for them to be profitable from the start. Good technology will allow them to operate efficiently as they grow.
We look forward to providing much of that technology. If you’re ready for a new opportunity and wholesale lending looks good to you, give us a call. We’ll share what we know and show you the tools that will help you succeed.
By Joe Camerieri, EVP, Client Account Management at Mortgage Cadence
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