Mark Freedle is chief executive officer of NetMore America, an expanding mortgage banker based in Walla Walla, Wash. The company is building a next generation mortgage banker through the power of the right relationships. In order to build a sustainable national platform through responsible lending, NetMore has assembled an impressive team of senior mortgage professionals, including Lisa Schreiber, NetMore's new chief strategy officer and former executive vice president of American Brokers Conduit. National Mortgage Professional Magazine recently sat down with Mark to get a briefing on NetMore's progress.
When did NetMore begin operations?
We started building our platform back in February 2006, and we officially launched NetMore in October of 2007. We funded our first loan at the end of October 2007, and today, we are the fastest growing mortgage company in the Northwest, with our sights on expanding our footprint throughout the United States. But NetMore is more than just about production volume, we are 100 percent focused on building the next generation mortgage banking leader through a sustainable national platform.
How are you defining a next generation mortgage banker?
We define "next generation" as leveraging the power of the right relationships. Whether it be our executive team that has successfully gotten us off the ground with great investor relationships, to our focus on the detail around who we employ and who we bring on as brokers and branches, to our ability to deliver a cost efficient process that includes "best in class" Web technologies that not only close more quality loans quickly, but provide education throughout the process. It's taking the lessons of the past and utilizing our best practice strategies to maintain quality throughout the process, while providing profitable results for our investors.
Tell us about your business model?
Our objective is to enable our lending partners, mortgage brokers and our branch system to operate efficiently and "friction free"a model based on service, speed and sustainability. The foundation of our model is built on what we call the five Ps: People, Product, Process, Purpose and Performance. We believe that we can deliver on these value propositions because we have a better understanding of the mortgage business and how to execute with a significant strength and expertise in secondary marketing, risk management, communication and a commitment to being a true partner.
How big is the operation and will you continue to hire throughout the remainder of 2008?
Today, we employ approximately 150 in total, including sales and operations having hired about 120 new employees so far in 2008. We are continuing to hire, and I would project that during the next 12 months, we will hire well over 100 additional employees to help us manage our growth. We just made some key hires, such as Lisa Schreiber as our chief strategy officer and Scott Holtz as our new regional vice president, eastern region.
Could you expand on Lisa Schreiber's new role?
Lisa's background is in building a quality national lending platform that is both scalable and profitable. She, alongside our executive team, will be focused on building NetMore's platform to include highest utilization of current Web-based technologies, a communication strategy that will be focused on both internal and external customers, and defining performance measurements that will enable NetMore to become a profitable and sustainable leader in the industry.
You have put together an impressive management team. What is some of the other experience they bring to the company?
We are extremely pleased to have put together such an experienced group of mortgage professionals. For example, Julie Krause, who is our chief operations officer, has been in the mortgage business for more than 30 years. Julie's background includes being one of the first individuals to get her Computerized Home Underwriting Management System (CHUMS) number in the Northwest. Her Federal Housing Administration (FHA) expertise is a core competency of NetMore's growth. Another key executive is Dan Ferris, our senior vice president of secondary marketing, who has more than 30 years experience that includes a Master Certified Mortgage Banker (CMB) designation. Only about 700 out of more than 340,000 mortgage professionals in the nation have this designation. Through Dans industry relationships, we have been able to build a credible investor base that has helped propel NetMore's growth.
What lines of business is NetMore currently focused on?
Today, NetMore is focused on two lines of business: Our wholesale lending channel and our professional branch system. As we grow, we will look to see if other mortgage related lines of business are within our strategic framework.
What percentage of your origination production is being generated by your wholesale channel?
Today, we are generating approximately 80 percent of our production from our wholesale channel and 20 percent from our retail branch system. From a growth standpoint, we see mortgage brokers as an underserved and undervalued origination source. Today's quality brokers are looking for lender partners that will help educate them on products like FHA, for example, as well as provide tools to meet their needs for quick and accurate loan closings. We see the exit of some of the larger competitors as an opportunity to serve this market segment.
What is NetMore's current geographic penetration?
We are licensed in 13 states: Washington, Oregon, California, Montana, Idaho, Wyoming, New Mexico, Arizona, Texas, Oklahoma, Missouri, Utah and Hawaii, and we have seven states pending approval. Our goal is to move east on a selective and strategic basis and be a nationwide mortgage banker over the next two years.
Are you planning on having a centralized wholesale operations center in the West as you move across the U.S.?
Today, we have one operations center based in Oregon. Our plan is to ultimately have two operations centers, one in the West and one in the Midwest. This will allow us to meet the needs of our wholesale brokers as we rapidly expand east and provide scalability in our operations.
What is NetMore's current production volume?
We are projecting full year 2008 mortgage production to be well in excess of $500 million, versus $14 million in 2007 when we only operated for three months of the year. Our August run rate was about $45 million in closed loans, and we believe that by the end of the year, we will be funding in excess of $100 million a month. By early spring 2009, we are projecting approximately $250 to $300 million a month run rate. Our goal is to be a top 25 national lender in the next 24 to 36 months.
What is your current average loan amount?
Today, our average loan amount is about $214,000, with an average loan-to-value of 79 percent. Our average FICO score is 719. We find that with our quality origination sources, even on government loans, our average FICO score is 685. What we're finding is that there is lots of good business to be written and our process is being well received.
Are you focusing on FHA products?
Today, we see that FHA is a growing segment of the marketplace. When we combine that with our FHA expertise, we enjoy a winning combination! We are also focused on agency products and see homeowners and investors moving to quality. Our product approach is all about suitability--the right product, for the right client, at the right time.
Could you talk about NetMore's secondary marketing capability?
Secondary marketing is run by Dan Ferris and his team. Dan Ferris is a Master CMB and teaches secondary marketing for the Mortgage Bankers Association. Dan also sits on the Capital Markets Committee for the MBA.
As a mortgage banker, we need to fund loans with our own monies or somebody else's. In our case, we go out into the marketplace and build relationships with warehouse lenders and gestation lenders to utilize their funds to fund our loans. We have also developed relationships with some of the major lenders to have an outlet to sell the loans we fund. Currently, we are selling to about seven or eight different lenders, but the majority probably goes to four or five. As we grow, we will have the opportunity to get approved as a seller/servicer with the two major agencies, Fannie Mae and Freddie Mac. This will allow us to continue selling as we have, but also to sell direct to the agencies, selling the servicing rights elsewhere or retaining servicing.
If I am a Mortgage Broker in today's market, why would I want to bring my business to NetMore versus another lender?
First, with FHA being a dominant product in mortgage lending today, there are very few mortgage banking operations that have the depth and experience in the FHA product platform that NetMore has. Just as important is helping our originators understand the FHA process thoroughly. Second, is our commitment to service. I know every company out there talks about service, but NetMore has a customer-centric culture that is driven by both experienced and accessible professionals and empowering technology. We believe this is a key competitive advantage. In addition, many brokers are tired of having to manage the ever changing landscape as it relates to state licensing, compliance and quality control. These brokers have excellent long-term relationships in their markets, they have excellent integrity and all they really want to do is what they do best, and that is to provide excellent loans for their clientele. They are happy and relieved to let NetMore take over those responsibilities for them.
What do you feel the future is for the Mortgage Broker?
The industry is going to flush out what it looks like going forward. There is definitely a place for mortgage brokers. Brokers that have good relationships, that don't practice predatory lending and that don't practice fraudulent activities are the brokers that we want to do business with, and ultimately, our investors will want to do business with. There's no doubt in my mind that the relationships they have in their communities will remain and grow stronger as they adopt best practices and reposition themselves as the consumer advocatebrokers are and will remain an integral part of financing the American dream of owning a home.
You have a lot on your plate. Do you have anytime for outside interest?
Short answer is, yes. But let me say this, I am having more fun right now than I have had at any time in my career. I get to work with some of the best, most respected people in the industry, and with branches and brokers that are professionals and committed to the marketthink about it, we are building the next generation mortgage lender, a sustainable national platform through responsible lending.
For more information, visit www.netmoreamerica.com.