360 Mortgage Group: Delivering the “Gold Standard” of Responsible Lending to the New Mortgage Broker Community
Mark Greco is the president and founder of 360 Mortgage Group LLC, a privately-owned mortgage bank with a 100 percent focus on the wholesale mortgage lending channel. Based in Austin, Texas, 360 Mortgage was founded in August 2007 as a retail lender. However, Mark quickly realized the opportunity to enter the wholesale channel. In early 2010, 360 Mortgage made the strategic decision to exit the retail channel and committed all its resources to wholesale lending. Since that time, the company has successfully expanded its wholesale lending platform from coast to coast, most recently entering the Southeast Region of the U.S. 360 Mortgage is an approved Fannie Mae seller/servicer and GNMA issuer and is actively building a servicing portfolio, which will provide the Company with greater stability and financial growth opportunity. Today, 360 Mortgage is focused on delivering the “Gold Standard” in responsible lending through the new and improved mortgage broker community by delivering on its value propositions of consistent, competitive pricing, extensive product knowledge, and best-in-class technology and service. In addition, 360 Mortgage strongly believes that mortgage brokers are now well positioned and poised to regain market share. National Mortgage Professional recently sat down with Mark to get a progress briefing on the state of 360 Mortgage. Could you start by providing our readers with some background on 360 Mortgage and its operations? Mark: 360 Mortgage Group was originally founded in 2007 as a retail lender. In 2007, when the mortgage industry began collapsing, several big lenders pulled out of the third-party origination (TPO) segment of the industry. When we witnessed these companies abandoning the mortgage broker channel, we saw an opportunity for 360 Mortgage. With my background and years of experience as a loan originator, I felt I had a strong knowledge base of the mortgage broker community and was convinced that there were still many high quality brokers out there. Because of this, 360 Mortgage’s business model was modified to serve the mortgage broker market. In April 2008, while the majority of lenders were focusing on retail, we transitioned our business to focus 100 percent on the wholesale channel. This has allowed us to partner with some of the top mortgage brokers in the nation and serve them in what they do best – originating loans with a very high touch approach. How do you define the “Gold Standard” in responsible lending? Mark: Lending criteria is based on three major elements: a borrower’s ability to repay a loan, a borrower’s willingness to repay a loan, and the collateral that backs a loan. The most important aspect is the repayment of a loan. Going through a downturn, can really test the theory of who can pay a loan and who will pay a loan. The borrowers that have been able to maintain their payments during times of adversity are the borrowers that we are looking to work with. HARP 2.0 has opened the doors to many of those borrowers. The “Gold Standard” of mortgage lending is a loan that performs. Our entire company and process is based on delivering this “Gold Standard” to all stakeholders throughout the lending value chain. It takes the right borrowers, the right brokers, and the right wholesaler working together to deliver the “Gold Standard.” Can you walk us through 360 Mortgage’s business model? Mark: A significant part of our business model is focused on identifying quality mortgage brokers. The industry as a whole has gone through a purging over the last six years. By and large, the majority of lending professionals that are still in this industry today are high quality mortgage professionals with significant experience. Our model is to partner with those professionals, to serve an underserved sector of the lending industry—the mortgage broker—and to make sure we work with the highest quality professionals in the wholesale channel. 360 Mortgage’s objective is to enable mortgage brokers to operate efficiently within a model based on service, speed and sustainability. We can deliver on these value propositions because we have a complete understanding of the mortgage business and how to execute in secondary marketing, risk management, communication, and marketing. Who are some key members of the senior team, and what attributes and experience do they bring to the company? Mark: 360 Mortgage has put together an impressive senior team of mortgage professionals and individuals of character. This team is an extremely collaborative team and has worked tirelessly to build 360 Mortgage into a growing company with a reputation of service and integrity. For background, I ran a retail mortgage banking operation for about 15 years. This role not only gave me significant mortgage experience, but also made me very empathetic towards the challenges that mortgage brokers and originators face every day in our industry. The industry is more challenging than ever, and it takes people who are very knowledgeable and insightful to perform well. I founded 360 Mortgage in 2007, and I have served as president throughout that time. Andrew WeissMalik, our chief operating officer, has been in the industry for 12 years. Andrew handles all of our capital markets and the technology development. He has facilitated the efficiencies that we bring to the industry and to our customers. Andrew is recognized as an industry leader in mortgage-technology innovation and he utilizes his past experience in capital markets, mortgage-product development, and efficient operations to enhance the lending value chain at 360 Mortgage. Using Andrew’s technology, we believe 360 Mortgage Group employs the most advanced wholesale origination and operations platform in the industry. Al Crisanty, who joined us about a year ago, is our vice president of national wholesale production. Al was formerly the EVP of national production at American Brokers Conduit. When Al joined American Brokers Conduit, they had a very small wholesale presence, and Al was a major reason ABC grew it to one of the largest wholesale lenders in the nation. What lines of business is 360 Mortgage focused on today? Mark: 360 Mortgage is 100 percent focused on the wholesale channel. We exited the retail channel in January 2011 when many other lenders were entering this channel. This strategy was consistent with the contrarian’s approach that we have implemented since first opening our doors. The wholesale channel allows us to expand without overextending ourselves. Coupled with the fact that the wholesale channel is an underserved sector of the market, it allows us to grow rapidly without creating a large liability for ourselves. You mentioned 360 Mortgage is one of the leaders in HARP 2.0 loan. Do you feel a HARP 3.0 should be introduced? Mark: I am certainly a proponent of HARP 3.0, primarily because there are a lot of people that financed their homes on sub-prime mortgage securities beginning in the late 90’s and through the collapse of the sub-prime market. These people’s loans are non-agency, and for that reason, they haven’t had the ability to refinance through HARP 2.0. Those that would qualify for the HARP 3.0, I envision, have made their payments even though they have been stuck at escalated interest rates of seven, eight, nine, or even 10 percent. From an economic perspective, I believe that those who do not have the opportunity to refinance right now create a risk for the recovery of the real estate market, as well as the overall economy. It’s not consistent with the efforts that the government has put forth to help consumers. If these borrowers have made payments, then it’s a safe opportunity for the government to invest in these individuals’ economic well-being. Do you anticipate that 360 Mortgage will continue to hire account executives in 2012? Mark: We will continue to grow in an assertive manner where and when opportunities present themselves. We are recruiting high-quality account executives throughout the U.S. and those that are committed to forming a unique partnership with mortgage brokers to help them understand today’s market challenges and opportunities, as well as build a significant business, are the ones we want to have join 360 Mortgage. What differentiates 360 Mortgage from other wholesale lenders? Mark: We are 100 percent exclusive to wholesale and do not support a retail presence. Also, what truly differentiates us from other wholesale lenders is the technology we have developed in-house. The intuitive aspect of our technology system keeps everyone informed at every key point throughout the mortgage lending process. In addition, 360 is one of only a handful of mortgage banks that are exclusive to the wholesale channel and do not compete with the mortgage brokers. Finally, 360 is one of the very few lenders offering the HARP product without any guideline overlays within the wholesale channel. Why do you think mortgage brokers are well positioned to take back market share? Mark: Consumers like having options, and that will not change. And because mortgage brokers have access to many different lenders, as opposed to just one bank, it becomes a better solution for borrowers. We have seen mortgage brokers begin to come back to the industry over the course of the last eight to 12 months as they begin to understand that market regulations are not going to destroy the broker or wholesale channel. We are confident that this trend is going to continue. HARP 2.0 has certainly helped on this front, as many mortgage banks do not understand, and therefore do not offer, HARP 2.0. These banks have stringent overlays or additional guidelines that do not open the doors to consumers who can and deserve to take advantage of HARP 2.0. Many originators who left the broker channel and entered the mortgage banking side of the business are now unable to service clients they have had for years. These originators might have put customers in loans in 2005 or 2006 on homes which are now upside down. Now the customers want to refinance, but because their former mortgage broker now works for a mortgage bank, they are unable to receive a solution because of the overlays being imposed. Mortgage brokers are seeing the opportunity to service clients in the wholesale channel, and we are seeing many professionals return to the broker side of the business. And best of all, many of them are looking to partner with 360 Mortgage for solutions. What are the top challenges that mortgage brokers need to be prepared for in 2012 and beyond? Mark: Obviously, we have been in an extended refinance boom, and eventually we are going to see interest rates increase. The Federal Reserve has committed to keeping interest rates low through 2015, although that is always subject to change. When rates do turn around and start to increase to normal levels, mortgage brokers and originators need to be prepared to go back to more traditional marketing. They will need to once again engage in channel marketing through builders and real estate agents and make sure there is a large focus on generating purchase business, as opposed to refinance business. I do want to emphasize that the mortgage broker will remain an integral part of financing the American dream of owning a home. Mortgage brokers that have good relationships operate at the highest standards of integrity, and partner with a wholesale lender like 360 Mortgage will be very successful. I have no doubt that the hyper-local relationships mortgage brokers have in their communities will remain and grow stronger, especially as they adopt best practices and reposition themselves as advocates for borrowers. What are 360 Mortgage’s primary areas of geographic penetration? What are the areas that 360 Mortgage will focus on expanding in next? Mark: We are currently licensed in 31 states, and we are continuing to hire quality individuals within those states. We have had the longest presence in the Southwest and West up through mountain states, such as Colorado and Utah. In 2011, we began to expand into the Southeast. We expect to continue attracting higher-quality producers and firm up our presence within that region before moving up the Eastern seaboard. The states we currently do business in are Alabama, Arizona, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, Wyoming and the District of Columbia. Our goal is to enter new states on a selective and strategic basis and become a nationwide wholesale lender in a responsible and reasonable manner. Tell us about your operational infrastructure. Do you have one centralized wholesale operations center in Austin, Texas? Mark: Yes, we do have a centralized operation system, which is very efficient. We are 100 percent paperless and with our technology, it’s unnecessary for us to have underwriters, closers, and funders among others in each regionalized marketplace. We have better efficiency in production by having our operations team centralized. We believe our team is one of the best in the business. What is the breadth of 360 Mortgage’s product offerings? Is the company planning on delivering any new products to the marketplace? Mark: Currently, the bulk of our production is HARP 2.0. However, we also offer government products. We have not seen a tremendous, or even viable, demand for jumbo products in the secondary market, so we are not really participating in that product. We are also offering any and all products offered by Fannie Mae, FHA and VA. What is 360 Mortgage’s current average loan amount and FICO score? Mark: Our current average loan amount is about $208,000 and our FICO score is in excess of 720. There is an abundance of quality borrowers looking to refinance or purchase a home, and we are finding there is a lot of good business to be written. Our process is being well received. For HARP 2.0 loans funded through Sept. 30, 2012, the average LTV was 127 percent, with a FICO of 755 and for the pending pipeline entering the fourth quarter of 2012, the average LTV has increased to 130 percent, with a FICO of 738. On a personal note, how did you get into the mortgage profession and what are some of your outside interests? Mark: I entered the mortgage business in 1992. I had been in the technology sales arena, and a very good friend of mine was doing very well in the mortgage industry as a result of the early 1990s refinance boom, so I decided to get into that same industry. I then became one of the top salespeople for the company I worked for. In 1995, I opened my own mortgage brokerage company and built that company over the course of the next fifteen years, becoming a regional retail mortgage banker. In 2007, with the collapse of the industry, I saw the opportunity to grow a company and fill a void that was in the marketplace, and went out and raised capital. That company is now 360 Mortgage Group. My outside interests are hunting and fishing and I also enjoy sports and outdoor events.