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The three P's of a commercial lending boom

Apr 19, 2007

The right choice: An interview with Al Crisanty of American Brokers ConduitMortgagePress.comAmerican Brokers Conduit, wholesale lending, Al Crisanty Al Crisanty is the senior vice president of production for the western region for American Brokers Conduit (ABC), the wholesale division of American Home Mortgage Investment Corporation. He was formerly the national production manager for Sacramento Calif.-based Capitol Commerce Mortgage. When interest rates suddenly increased in August 2003, Capitol Commerce collapsed because of an unhedged pipeline. Crisanty engineered the transition of more than 300 former Capitol Commerce employees to American Home Mortgage's wholesale division American Brokers Conduit and today reports directly to Donald Henig, president of ABC. Commenting on the integration of Capitol Commerce into American Brokers Conduit and Al Crisanty, Donald Henig offered, "ABC significantly benefited when we had the opportunity to hire well over 300 top quality, experienced wholesale employees. We experienced an increase in our volume of business, but more importantly, we retained the top management in Al Crisanty. Al not only brought over an entire team, but he and his team helped us to improve our processes and systems to work more efficiently in a wholesale environment. This opportunity changed the face of American Brokers Conduit for the better and is a key reason ABC is currently ranked as the 10th largest residential wholesale lender in the U.S." Mr. Henig continued, "Every great team has a combination of experience, desire, knowledge and strong personalities. That describes ABC's senior management team to the letter." Recently, The Mortgage Press had the opportunity to speak with Al Crisanty. The Mortgage Press: It's great to hear stories of success that come out of something negative. Al Crisanty: That's so true. Much too often we see these situations break the spirit, but what really stands out in my mind is how quickly and strongly our team rallied together in order to overcome the challenges and turn them into opportunities. I know I speak for the entire team of managers who became part of American Brokers Conduit back in the fall of 2003 when I say that we have had both an exciting journey and successful partnership. Our success is clearly evident as ABC is currently ranked as the 10th largest wholesale lender in the US after Q2 2005, compared to being ranked 32nd in mid-year 2003. TMP: Can you tell us how you got into the mortgage industry? AC: I started in the business in the early 80s when interest rates were as high as they've ever been. My first job in the mortgage industry was actually in "hard money" lending. I later went to work for Unified Mortgage Company, located in Cupertino, Calif., where I worked as a loan officer. I subsequently moved into secondary marketing in 1984 where I remained until the company was purchased by First Gibraltar of Texas in the late 80s. I then transitioned into the Correspondent side of the mortgage business working for Prudential Home Mortgage from 1990-1993, Chemical Mortgage from 1993-1995 and BancBoston/Homeside from 1995-1999. TMP: When did you start with Capitol Commerce? AC: I joined Capitol Commerce in early 1999 with a primary focus of helping them expand their origination unit as well as provide strategic direction. TMP: What was your role at Capitol Commerce? AC: I was their national production manager. My main focus was on expanding their origination unit which meant identifying key growth markets, recruiting production professionals to manage and expand the company's branch network and insuring that corporate priorities were aligned with this growth model. In early 1999, the company had a handful of offices in California, and at the time, were funding on average about $100 million per month. We opened our first new office in Portland, Ore. in June 1999 and continued this process until we had 15 offices nationally. TMP: Were you attached to a core group of professionals at Capitol Commerce that you considered bringing with you when you moved to a different lender? AC: Every manager had their own special set of strengths that complemented the team and contributed to our success. This was an exceptional team of leaders, and I am convinced that at the time, this was the finest group of mortgage professionals assembled at one company. In four and a half years, we grew from $100 million per month to over $3.5 billion in our final month together (July 2003). Growth this dramatic can only happen with an exceptional team focused on results. TMP: Why did you and your team chose to join American Home Mortgage (AHM) and become part of ABC? AC: When Capitol Commerce went out of business, we only had a couple of days to try to process what had happened and take action. We did, however, know that we needed to move quickly if we were to keep the team together. Our goal was to move all 15 branches together, but barring that, we would continue working together to ensure that all 15 offices found a suitable home. I started contacting potential company candidates on Friday (Aug. 15, 2003) and scheduled meetings with a handful of companies for the following Monday and Tuesday. Several of our branch managers with various backgrounds and strengths (product experts, finance experts, and operational flow experts, among others) flew to our Folsom office to participate in the interview process with the potential candidates. We followed a structured due diligence process. Our goal was to identify an organization where we would have strong cultural alignment, and at the same time have minimal branch/territory overlap. TMP: What were the characteristics of the companies that you were looking at? AC: Financial strength was critical to us. If we had the financial strength that AHM has, we may have been able to weather the losses we (Capitol Commerce) sustained when the head of secondary marketing failed to hedge the pipeline properly. Financial strength, stability and a quality management team were at the top of our list. We were also concerned about making sure we had a cultural fit and that management would give us a seat at the table and provide us with the resources necessary to continue to expand. TMP: Would you say that the fit with AHM had a lot to do with the combined company having the broker mentality? AC: At that time, AHM was more of a retail operation. They had three wholesale offices on the east coast operating as ABC and we had 15 offices that we intended to bring over. We saw this as a great fit, because we could be the foundation for the wholesale business for the company. It would also give us the opportunity to demonstrate how our model worked and how it could be successful. We felt very strongly that the leadership team at AHM would listen to us, embrace what we were doing and be open to deploying the necessary resources. TMP: How many of the former employees who joined ABC are still working with you today? AC: After over two years there are still about 60-70 percent of our former employees working as part of the ABC team. All 15 branches are still open and operating successfully with nine of the original branch managers still in place: Brad Allen, Phoenix; Joy Burns, Houston; Toni Dann, Las Vegas; Jeanette McGraw, Portland, Ore.; Sean Hennessy, Lisle, Ill.; Martha Gramespacher, Fresno, Calif.; Jeff Raich, Dallas; Dave Waddell, Folsom, Calif. and Sundi Olson, San Diego. TMP: Would you say that those employees who have made the transition to ABC would say that you made the right call? AC: With 100 percent conviction, I would say yes. There have been some challenges, but the past few years have been an exciting time for us at ABC. Our team has helped deliver both material results and positioned ABC as a leader in the wholesale marketplace. We are proud to be part of ABC and American Home Mortgage. TMP: How did you keep focused on growing the business after the demoralizing failure of Capitol Commerce? AC: That was definitely one of our greatest challenges. I spent a lot of time on the road meeting with the managers and staff at our branches in an effort to offer my support. It took about a year for the branches to work through the Cap Com days and begin feeling as if they were truly part of the ABC family. Keep in mind that on top of everything else, the team went from funding over $3.5 billion in July 2003 to only $55 million in September 2003. However, by April 2004, the region's volume was up to just over $1.1 billion! How did we get there? We chose to focus on all of the positives. For example, we had a few branches that just seemed to hit the ground running. Those were our Folsom, Calif. office, run by Dave Waddell, branch manager, and Roxanne Mazarakis, operations manager; our Phoenix office run by Brad Allen, branch manager and our Portland, Ore. office run by Jeanette McGraw, branch manager. They had their staff focus on what we had to offer as part of ABC and shared this with their customers. Another significant challenge was the perception of our branches in the broker community in light of the failure. Unfortunately, many in the broker community blamed our branch teams for the impact on their business. Our branches deserve a tremendous amount of credit for working through these enormous challenges with their customers and rebuilding those relationships. TMP: What kind of production would you say ABC west offices are doing now? AC: Today, we are running between $1 to 1.4 billion in volume per month. We continue to grow in a very difficult margin environment where many companies are losing ground. TMP: What do you feel were the biggest integration issues? AC: One of the biggest issues was that of technology. The AHM system was foreign to us and was heavily retail oriented. This meant that there were many more screens and fields to complete in order to take a loan from input to funding. That translated into huge inefficiencies at the branch level. We had created a team at Capitol Commerce comprised of staff members familiar with both systems and process flow specifically to assist with these challenges. We called them our System Strategy Task force (SST). We sent our SST group to our corporate office to see what could be done to improve the system, and after a few days they came back with a recommendation of eliminating over 160 screens, along with other process enhancements. To the credit of Mike Strauss, CEO of American Home Mortgage Investment Corp.; Don Henig, president of ABC; Lisa Schreiber, EVP of ABC, and Michele Newsham, SVP of operations of ABC, they took our recommendations and immediately made the needed changes to improve the process. TMP: Did ABC modify their systems for the crew from Capitol Commerce or did you adapt to their systems? AC: There was give and take on both sides. There was some discussion about the system that was in place and about replacing it with a new system, but there were inherent challenges with that as well. We concluded that we were going to keep the system and modify it to our needs. Through the use of task forces and user groups we made specific changes that allowed the branches to gain operational flow efficiencies. On the technology side, at Capitol Commerce we spent four years trying to create a viable Web site. We have been part of ABC for two years now and the initiative to build a Web site began just about a year ago, and we now have a great website. Lisa Schreiber spearheaded that effort, and I am amazed that they were able to pull it together so quickly, particularly with a website that is as functional as ours, with tools such as our online product search engine, Product Advisor. Our brokers love it, and today, over 90 percent of our lock-ins are coming in via the Web. TMP: How big is ABC's West Coast operation today? AC: Today, there are 16 branches (with the most recent opening of our satellite branch in Minneapolis), with about 430 employees in the West Coast division. TMP: What do you consider your management style? AC: I would call myself an engaged manager. I am very supportive of my team, but I also try to push them outside of their comfort zone to help them meet their potential. I really focus on empowerment, while making sure that they have all the tools and resources they need to do their jobs successfully. TMP: What is the culture of ABC today? AC: It has always been a pro-production culture and that has only been amplified by this [integration] process. I think that Mike Strauss and Don Henig have embraced our model and what we are doing to help grow the business. There has been growth both ways, but the culture has been marked by open and effective communication and acceptance of ideas. It truly exemplifies what we wanted two years ago, which was the opportunity to do what we feel we do best and have access to the tools and resources we need. TMP: What are you doing to drive ABC's growth? AC: ABC's growth is being driven by our management team's focus and the execution of our business plan, which comprises a broker centric strategy that is interconnected with our five platforms of growth: Product, Service, Technology, Marketing and Education. These platforms have been developed to help our mortgage partners not only increase their loan volume, but to also better service their customers and improve their profitability. Going into a purchase market, we continue to focus heavily on service levels. Competitive pricing is important, but in a purchase market, speed is imperative. We are really working hard on improving our process flow efficiencies and are making sure that every branch maintains strong turn times. TMP: Do you think education is a very important program for a lender to deliver to its broker partners? AC: Yes, I do and at ABC, we are committed in driving growth through educational initiatives that focus on continuous improvement. These initiatives are developed to help both internal employees and ABC's mortgage broker partners to adjust to rapidly changing market conditions. For example, in order to help our wholesale brokers we developed a series of nationwide educational seminars called the Advisor Seminar Series. These seminars are designed not only to better understand what ABC can offer, but to provide additional skills, tools and resources to our mortgage brokers, in order to assist them in building a larger, more profitable business, while meeting their customer's needs. Since the beginning of the year, our seminars have been held in over 35 cities throughout the U.S. with over 5,000 mortgage brokers attending. TMP: With your years of experience in the mortgage industry, what do you feel is the future of the mortgage broker? AC: I certainly do not see the mortgage broker community's role diminishing. They are the quintessential entrepreneur. I've met many of them when I go out with my account executives and visit customers. These are the folks who make it all happen. Although we talk a lot about technology, this is a relationship business. You take the relationship out of this business and things will come to a grinding halt. The broker community does a fantastic job establishing and maintaining those relationships, and ABC is committed to helping them enhance those relationships. TMP: How did your staff react to the news that ABC was ranked as the 10th largest wholesaler in the second quarter of 2005, up from 13th in the first quarter of 2005 and 16th in the fourth quarter of 2004? AC: We had a tremendous response from the branches. They are very excited to be part of a successful team and organization. Everyone loves to be part of a winning team, and together, we have created that here at ABC. In particular, the western region group that came from Capitol Commerce feels very strongly that we made the right decision and are very proud of the fact that we are a meaningful part of the success that ABC and AHM has had. Even the candidates who we interview for positions here at ABC are aware of the ranking and want to be a part of our future success. TMP: The real estate investment trust (REIT) structure of ABC's parent AHM offers the ability to develop new products in a relatively short time span. Is that something that has been well-received by the broker community? AC: Because of the competitive nature of the mortgage business, leading companies need to be more agile and adept at producing and delivering products that respond to changing interest rate and customer needs. Before joining ABC, we did not have the same scope of product flexibility that we now have at ABC because of our parent company's (AHM) REIT structure. Our ability to develop products outside of the mainstream has been a critical part of our success and has allowed us to capture market share from competitors. ABC is committed to offering a product portfolio to its mortgage broker partners that is both innovative and flexible. TMP: How does the senior management team at ABC work together? AC: ABC operates with a very flat management structure. This management structure allows us to listen, understand and respond to business issues much more effectively. It also allows ABC to meet the needs of both the company and its mortgage broker partners. Our management team clearly understands the direction of ABC, and we are empowered to make decisions and allow decisions to be made at the lowest level whenever possible, through ABC's task force and committee process. TMP: How do you and Bob O'Branovich, head of ABC's East Coast wholesale division, work together? Is it a rivalry or do you work together to grow the overall business? AC: As you can imagine, it was a challenge for me to go from being the head of national production to taking over an entire region. But, there was no way that I could have held this team together throughout the integration process without Bob's cooperation. I have learned a lot from Bob. He is a product expert and knows more about products than I will ever know. In fact, Bob and I work together closely and complement each other well. We are both very busy, but whenever we get the chance to chat and brainstorm, we do and I continue to learn from Bob. We are both working within our regions to open new offices to increase ABC's national footprint and continue our growth. TMP: What was your reason for success in the past and now at ABC? AC: The bottom line is, I focus my efforts on hiring the best people. There are four points that I preach to my managers: number one, hire good people; secondly, put them in the right place to succeed; third, give them the tools and resources they need to succeed, and finally, let them do their jobs. This may sound like a simple plan, but it is my belief and the belief of my managers that this strategy is the reason that we have succeeded where others have failed. We continually strive to bring the best people on board, and do not just hire bodies. I think if you focus on your people, which ABC does, you are well positioned to grow into the future. TMP: Do you feel that your involvement with the National Association of Mortgage Brokers and the California Association of Mortgage Brokers enhances your relationship with the mortgage broker community? AC: I think it does, although for the last couple of years I have not been able to commit as much time as I would like to these relationships. I believe in being involved, and many of our local branches are involved with their local broker community which is something that ABC encourages. One of the goals of each of our managers is to go out in the field to meet with customers and be active at industry events. I think it's critical that they do this in order to stay on top of the issues of the day, and to better support their customers. TMP: When Capitol Commerce closed there was a message on the answering machine that said, "Thanks for the ride." You've just gotten a ride on the ABC train; do you think that you're going to stay on that ride for a while? AC: We often use the analogy of riding a wave when we talk about our success, and right now, it feels like we've gotten hold of a big one and we are going to ride it out. We know we're doing a lot of things very well, but by no means are we satisfied with where we are and what we have accomplished. Every great organization recognizes their key competencies and work hard everyday to keep everyone focused on improving. Many great organizations have failed simply because they became complacent. Not ABC. One of our strengths is that we encourage open and candid communication from all levels of the organization. This insures that we get the feedback necessary to identify key needs and allocate resources appropriately. Based on this ongoing feedback, we currently have a number of initiatives aimed at keeping us on track as we move into 2006. I feel very fortunate to have had such an exceptional branch management team to ride along with over the last two years, and I can honestly there is not a more capable group of managers in our industry than those I work with every day. Combined with our strong corporate leadership and our innovative broker centric strategy, we should be riding together for a very long time to come.
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