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MILA announces platinum partnership with NAMB

National Mortgage Professional
Sep 25, 2005

Going for broker: success, solutions and the story of MILA Inc. Peg KernLayne Sapp, Mila Inc. "Go confidently in the direction of your dreams. Live the life you have imagined." Henry David Thoreau Bound to rise America is a nation rooted in the promise that an entrepreneurial spirit and strong work ethic are all you need to achieve success. Theoretically speaking, an ambitious young man of 18 could educate himself about economics, pass the Real Estate Licensing Exam and begin to purchase and sell real estate. That young man might attend college briefly, but ultimately realize that entrepreneurship is not something taught at universities. Perhaps this young man would one day launch his own company and achieve tremendous financial success. Sound like a Horatio Alger tale or a rags-to-riches movie of the week? This is no fictional account: this is the story of Layne Sapp, founder and CEO of MILA Inc., one of the fastest growing companies in the nation and a National Association of Mortgage Brokers Platinum Industry Partner. Shortly after graduating from high school, Sapp formed a private lending fund which he managed until he was 23. In 1984, he broke away from that fund and began brokering loans, using his own capital and some private money on the side. In 1989, Sapp incorporated the company as MILA Inc., which began doing business in 1992 as a mortgage banker specializing in non-prime lending products. Sapp's early achievements and single-handed rise to success in the mortgage industry without the "benefit" of a college education might be difficult to believe, until you speak with him. He is what academics would call "prodigious" and what your mother would call a "smart cookie" clear-minded, forward-thinking, logical and inspired; a full 15 years after establishing MILA, he is still bubbling with ideas about technology, relationship development and redesigning the alt-A lending process. Foolish inconsistency is the hobgoblin... By the mid-1990s, MILA was funding approximately $30 million per month. However, Sapp was also noticing that his production cost was excessively high, especially compared to prime lenders. He pulled his team together to analyze the process and uncover the costly culprit. "I found that there were so many inconsistencies within alt-A-B-C lending, that brokers didn't know what to expect," said Sapp. "Because they didn't know what to expect, they would send in an incomplete file, which would then generate a slew of phone calls. It would take you a month to close the loan because the broker could not send you a complete file to begin with." So MILA set out to discover how, as lenders, they could anticipate the brokers' needs and create consistency within the sub-prime lending process. Sapp gathered his team into a conference room and spent some serious time analyzing the process. "How can we create a consistent process where we're pushing information out to the broker instead of them having to call us?" pondered Sapp. "We examined what kind of phone calls we were getting from brokers and how we can manage and measure those calls and the response times tied to them. In this business, everyone makes excuses up from the lending standpoint about who's responsible for what, because you have appraisers, third-party vendors and the rise of value and title companies; the broker must fulfill the loan conditions and the lender in turn revalidates them; then you have the argument of whether those conditions are right or wrong or indifferent. I just don't want to have any of those arguments." Sapp's background gives him added insight to take on the challenge of streamlining the alt-A process. "It is important to understand what the broker has to go through to get a pre-qualification, communicate with the real estate agent and customer, keep everybody happy and then deal with multiple lenders, all of whom have different rules and conditions. All of these factors create an inconsistent process. It's not good." Sub-prime that's above par Sapp's goal is to manage the mortgage process effectively so that brokers are freed up to take more applications. This includes coming up with a consistent automated appraisal approach that brokers feel comfortable with. MILA is interested in making the broker productive by getting them leads and simplifying the process. This way, even if MILA's brokers are making half as much money 10 years from now because of marketplace compression, they will still make more money due to the increased number of applications they can take. MILA's plan includes extensive training and support programs for brokers. Instead of simply training about the company's products and pricing, MILA concentrates on teaching brokers about how the company manages the loan process, and how brokers can get answers from MILA's AccessPoint technology. In other words, MILA's focus is on process, not product. "Teaching [brokers about] the process of how to communicate, how to complete an application and get the right results that's what we're trying to manage in the field today," said Sapp, who also points out that automated underwriting is only as good as the information you put into it, so if the training is not sufficient on how to accurately complete the automated underwriting process, you may end up with an inaccurate decision. MILA is one of the few lenders that look at 250 underwriting parameters for each automated decision, which enables them to capture the nuances that many automated underwriting programs miss. Even with hundreds of different program options and 250 parameters, brokers can still receive an initial decision in 10 seconds. "When the broker fills out the online application through MILA's automated underwriting engine, the answers are always accurate, they're always consistent," said Sapp. Better communication through technology Sapp has a particular talent for seeing the big picture when it comes to client relationships. He is also quite innovative about creating new ways to improve MILA's communication with brokers. But how can you keep your finger on the pulse of literally thousands of brokers across the country? The answer lies in MILA's AccessPoint technology, which develops internal broker-by-broker profiles so Sapp and his team can see exactly what type of business they are receiving from each broker, how much of it is purchase versus refinance and what the average FICO scores are from a particular brokers' borrowers. This creates an intimate understanding of each broker and company, so MILA knows exactly how to market and communicate with them. MILA has also calculated the average time it takes to complete each underwriting task associated with a loan once it's been received, so the company can predict when a loan decision will be finalized, down to the hour a piece of information that makes the broker's job that much easier. "If it's worth anything, it can be measured," added Sapp. In addition, AccessPoint allows company owners to look at every document and action relating to a MILA loan on a branch-by-branch level, all in real-time. In the future, the company will offer a consumer version of AccessPoint, in which the broker can assign passwords to both the borrower and real estate agent so they can track the progress of the loan. MILA also looks to AccessPoint to identify any unmet needs among its broker clients. "Most of our brokers don't say 'I need this product,'" explained Sapp. "Instead, they unknowingly ask for it through automated underwriting; we can track what they ask for and what we could or couldn't do. We look for trends." For example, MILA received thousands of requests for loan amount sizes that were greater than what they were offering. Through AccessPoint, the company already knew the FICO scores of the borrowers, the average size of the loans and where they were located. So MILA recently enhanced its jumbo loan offerings to accommodate this need, which is what makes MILA so exceptional: they have developed intelligent technology that not only automates the loan process, but also acts as the eyes and ears for the company, right down to the last broker, analyzing unmet needs before the broker has articulated them. The rate debate: Can brokers and MILA endure in a rising rate environment? Most industry experts agree that a rate increase will happen soon a prediction that makes many wholesalers nervous, but not MILA. According to Sapp, "As rates go up, two things happen: Customers who have been waiting for rates to decrease finally start to buy; and customers who could qualify yesterday, cannot qualify in a higher rate environment because the debt ratios are too high. As a result, the broker who no longer has as many applications to fulfill will now take an A-B credit borrower. So we typically see a jump in business when rates increase because our underwriting criteria are more liberal." Nonetheless, with rising rates, a waning refi boom and emerging technologies, the fate of the mortgage broker is uncertain. In the past, brokers have successfully adapted to an ever-changing environment of regulatory issues and market trends. Today, however, the game has changed entirely, and this is where MILA steps up to the plate once again. "The lender must be accountable to the broker and create efficiencies for the broker that they don't have today, to make sure they are around tomorrow," says Sapp, who feels the future will empower brokers to "touch" more customers, which is what they do best. Brokers excel at taking applications and effectively marketing themselves to friends, relatives and real estate agents, and MILA wants to free them up to do just that by leaving the lending and documentation management to the lender. "It's all about making the broker more efficient and understanding what their skill set is, understanding how to help them manage their business but not take business away from them," explained Sapp. "No one can deliver a product better or cheaper than a broker can today." Notes: - MILA Inc. continues to expand with new office space in Lynnwood, Wash. - MILA Inc. has purchased one of two empty office buildings at the Quadrant I-5 Center near downtown Lynnwood, Wash. MILA CEO Layne Sapp purchased the building for multiple tenants, including MILA. - "MILA's success in the Puget Sound market for delivering high-quality wholesale mortgage products and services paves the way for our expansion," said Sapp. "In an industry that demands instant access to critical documentation, MILA is responding with technology that improves the overall loan processing time. We look forward to growing and working with the community." - The new office, located at 20700 44th Avenue West in Lynnwood, Wash, is a few miles away from MILA's corporate headquarters in Mountlake Terrace. Nearly $5 million in improvements were completed in the 176,000 sq.-ft. building, including work to the ventilation systems, lobby and office areas. MILA employees and additional tenants are expected to move into the building in late fall. - MILA's expansion is estimated to bring more than 800 new jobs to the building and to Snohomish County respectively over the next 36 months. MILA's employee count will exceed 1,000 employees locally, totaling approximately 1,200 nationally. MILA has two other branch offices in Arizona and Missouri. Headquartered in Mountlake Terrace, Wash., MILA Inc. is a wholesale non-prime lender. For more information, call (800) 332-MILA or visit www.mila.com.
Published
Sep 25, 2005
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