John Walsh is the president of Total Mortgage Services LLC, an expanding mortgage banker based in Milford, Conn. Through its centralized business model, Total Mortgage Services is able to create significant efficiencies to both its origination and operational infrastructure, and pass the cost and time savings on to borrowers in the form of lower rates and better service. The company recently announced that it is entering the wholesale residential mortgage lending business. Total Mortgage Services will be launching TMS Funding in January 2010, to complement its very successful retail lending platform and offer mortgage brokers and borrowers better service, choice, knowledge and efficiency in the mortgage lending process. National Mortgage Professional Magazine recently sat down with John Walsh to get a briefing on Total Mortgage Services’ progress and their newly launched wholesale business, TMS Funding. John, thank you for taking the time to speak with National Mortgage Professional Magazine. Could you start by telling our readers when Total Mortgage Services began operations? Total Mortgage Services (also referred to as Total Mortgage) was founded in May of 1997 with a customer-centric approach from day one and a mission of responsible lending. Our original geographic focus was in Connecticut, but we now operate in 19 states and are currently looking to selectively expand into attractive markets. Today, we offer a range of mortgage solutions, from FHA to jumbo loans, with some of the lowest mortgage rates in the industry. We have and will continue to focus on working with high quality borrowers. Total Mortgage has always maintained very high underwriting standards and controls, even when many mortgage lenders stretched their underwriting standards and increased sub-prime and other high risk originations to attract business. We made a conscious decision to avoid these types of loans and expand our business in a more strategic and responsible manner. Our strategy has proved correct, as we are continuing to grow and even after this recent mortgage lending crisis we still have not had to repurchase a loan we originated. Could you explain to our readers Total Mortgage Services' business model? We like to compare our model to Walmart’s model. We offer significant value to our clients everyday by combining low rates--maybe the lowest rates--and great service. Because of our centralized model, we are able to offer borrowers tangible value in both cost and time savings. We have centralized both our origination platform and operational infrastructure in Milford, Conn. This strategy has enabled Total Mortgage to deliver one of the most efficient end-to-end lending operations that can optimize the lending value chain and mitigate risk throughout our organization. Our model creates significant cost savings that we pass on to our clients in the form of low current mortgage rates and fast turn times. We have always, and will continue going forward, to focus on working with the high-end credit borrower, giving them personalized service and the most competitive mortgage rates. Where are Total Mortgage Services' primary areas of geographic penetration at this time? We are currently licensed in 19 states: California, Connecticut, Delaware, Florida, Georgia, Illinois, Massachusetts, Maryland, Maine, Michigan, North Carolina, New Jersey, New Hampshire, New York, Rhode Island, South Carolina, Tennessee, Vermont and Virginia. We have an application pending with the state of Pennsylvania and intend to become licensed in an additional five to 10 states in 2010. Our goal is to expand on a selective and strategic basis and be a nationwide mortgage banker. How many employees does Total Mortgage Services employ? Total Mortgage currently employs approximately 70 mortgage professionals and we are adding selectively to both our production team and operational/compliance teams. Our retail platform employs 25 very experienced and advice driven loan officers. Many of these professionals have been with Total Mortgage for over eight years, and have worked through a few mortgage lending cycles getting deals done. They are extremely capable of working with homeowners to successfully complete either a refinancing or purchase loan. With 2010 expected to be a difficult year for overall mortgage originations in the U.S., what does Total Mortgage Services expect to close and fund in 2010? Despite a total U.S. mortgage market that is expected to decline year-over-year, we are projecting our full year production in 2010 to increase to over $1 billion. We believe our 2010 production will be positively impacted by our entry into wholesale lending, which will be formally launched in January 2010, an increased focused on originating FHA loans, as we just received our Full-Eagle in December 2009, and strategic geographic expansion. You just received your Full-Eagle, are you doing any FHA volume today? And what is you current product mix? First we are very proud to now have our Full-Eagle. We believe this development help position Total Mortgage for additional growth in 2010 and beyond. In 2009, our FHA volume was only about five percent of our overall production. It is amazing that we could significantly increase our production in 2009 with minimal exposure to the expanding FHA market, which now makes up about 30 percent of the total mortgage market. With our Full-Eagle, our goal is to increase our FHA production to about 20-25 percent of our total production in 2010. However, our standards will not drop as we will continue to focus on working with high quality borrowers. In 2009, Total Mortgage closed mostly agency-eligible product and approximately 15 percent in jumbo originations. How were you able to continue to participate in the jumbo marketplace in 2009? Today the jumbo marketplace is all about relationships. The demand for jumbo mortgages has shrunk, and maintaining the highest standards of loan origination is critical to success. We have established strategic partnerships with several lenders actively purchasing jumbo loans. What is your current average loan amount and FICO score? Today, our average loan amount is about $309,000 with an average loan to value of 66 percent. Our average FICO score is 763. While these are conservative numbers, we are finding there are lots of quality originations to be written in the marketplace. Could you take a moment to expand on your technology platform and how important it is in your plans? Technology is extremely important to Total Mortgage and will play an even more important role for us as we enter the wholesale market. We have just made a significant investment for a new LOS that is now in operation and positions Total Mortgage on the cutting edge of technology. In addition to many other benefits, this new LOS has superior fraud detection tools which will help prevent problem loans from clogging up our pipeline and tying up our resources. This enables us to originate loans with greater efficiency, and ultimately creates more savings opportunities for our customers. In addition, we just purchased a new accounting software that is more sophisticated and will allow us to do more in depth analysis of our business and financial reporting. Why enter the wholesale channel now when the ranks of mortgage brokers are declining? We see a tremendous opportunity in the wholesale channel today as many lenders have exited the channel and the remaining lenders are not providing real value either from a rate perspective or service levels. Through our centralized model we believe TMS Funding can quickly become an important resource for the mortgage broker community and help them meet their client’s needs. There are still many credible and knowledgeable mortgage brokers that are committed to doing the right thing, day in and day out, to help local borrowers find the most suitable mortgage at the most competitive rate. These are the mortgage brokers that TMS Funding wants to partner with on an ongoing basis. What do you feel the future is for the mortgage broker? The broker plays a very important role in providing borrowers access to some of the lowest rates available in the industry. They need to be part of the solution for borrowers. Without the mortgage broker, most of the competition will go away and consumers will be left with only a few choices that won't have any motivation to provide competitive rates. But to be part of the future of the industry or partner with TMS Funding mortgage brokers need to be committed to extensive product knowledge, ethical behavior, and the highest levels of customer service. Tell us about your business model for your Wholesale unit TMS Funding and who will run the operation? Just like our retail channel, our wholesale lending division will operate through a centralized model in order to improve the consistency and quality of the broker experience and reduce the wholesale platform’s risk profile. We believe we can really make an impact with mortgage brokers and their clients by delivering on a value proposition of service, which is sorely lacking today, and deliver on our commitment to providing industry leading turn times. Jim Lynch will lead TMS Funding. He has over 20 years of wholesale lending experience and has overseen wholesale lending channels on the East Coast for American Mortgage Network (AmNet), Wachovia, and SCME Mortgage Bankers. Jim has extensive experience in building teams and delivering on best in class service proposition. John before I let you go could you weigh in on the current issue surrounding appraisals? We believe HVCC is a major issue for our industry. HVCC has dismantled numerous mortgage loans by creating a situation where a AMC's ends up hiring the lowest cost and an often inexperienced appraiser to do an appraisal out of his normal geographical area. The quality of the appraisal is often times very poor and doesn't meet standard appraisal guidelines. It seems to me that this mandate will, in all likelihood, be loosened or removed altogether once these issues come to bear. John, thank you for taking the time to speak with the National Professional Magazine. Please keep us posted on future developments at Total Mortgage so we can keep our readers informed. For more information, visit www.TotalMortgage.com.