Like many of you, I recently watched the opening ceremonies for the Olympic Games being held in London. I was particularly struck by the parade of athletes from 200-plus nations, 81 of which had never won an Olympic medal. In their sometimes attractive, sometimes gaudy, outfits they marched into the stadium led by a flag bearer who proudly waved their nation’s symbol for the world to see before planting it in the ground beside the flags of other nations. This symbolic planting of the flag made a powerful statement: “We are here … We are dedicated to our sport and loyal to our country … We will bring home the gold!”
As the mortgage industry has faced relentless challenges over the past five years, the wholesale channel has been repeatedly written-off. Yet proud participants in this competition have repeatedly planted their flag, claimed the right to compete and vowed to meet any obstacle put in their path.
In an expanded piece elsewhere in this edition of National Mortgage Professional Magazine, Mark Greco, president of mid-level wholesale mortgage banker 360 Mortgage Group, discusses the rationality of the wholesale mortgage market and how all of the participants have made decisions based on their individual best interests. For remaining lenders, serving this channel after the departure of the major banks, one decision has been crucial in signaling a strong commitment to the wholesale channel and fortifying broker relationships. That decision—this planting of the flag, if you will—was to obtain agency direct status with either Fannie Mae or Freddie Mac and with Ginnie Mae as well.
Direct Agency Approval status is held by only a few of the mid-level mortgage banks. It is essential today for a mortgage bank to possess this status if they expect to survive. Increased net worth requirements and the lengthy and complex agency approval process, means that those mortgage bankers yet to proceed down this path have a difficult road ahead of them.
What is Agency Direct Approval status and why is it so important to mortgage brokers? Agency Direct Approval status enables a wholesale mortgage banker to underwrite loan files in accordance with the standards of the government-sponsored enterprises (GSEs) that currently comprise the vast majority of the secondary market for residential loans. When a Direct Approval mortgage bank follows these guidelines in approving loans they are guaranteed that the agencies will purchase the loans. Simply put, unless a mortgage banker has Agency Direct Approval, that mortgage banker cannot guarantee a market for a loan originated by a broker. Without big banks and their Agency Direct Approval, brokers must have relationships with firms who are guaranteed market-makers for their loan files.
Wholesale mortgage lending, through experienced, high integrity brokers will produce the highest quality loans in the market. Together we can march into the market place, proudly plant our flag and declare: “We are here to stay … We are committed to supporting our industry and our customers … We will succeed!”
Al Crisanty is vice president of national wholesale production for 360 Mortgage Group and is responsible for overseeing regional sales managers as the company seeks to expand operations to all 50 states. Formerly the national wholesale director for Caliber Funding, Al was responsible for the development and expansion of Caliber’s wholesale production channel. Additionally, Al served as executive vice president of national production for American Home Mortgage, successfully transitioning the 500-member production team from Capital Commerce Mortgage Company. Al may be reached by phone at (916) 761-1624 or e-mail firstname.lastname@example.org.