Each month, National Mortgage Professional Magazine will focus on one of the industry's top players in our "Mortgage Professional of the Month" feature. This month, we had a chance to chat with Joe Amoroso, Director of National Sales, Real Estate Mortgage Network Inc. (REMN), headquartered in River Edge, N.J. A graduate of the State University of New York at Delhi, Joe began his career in the hospitality and restaurant industry, eventually moving into the broker business in the late 1980s.
He began working for Fairbank Mortgage as senior vice president of sales, and was instrumental in the startup of the company’s wholesale channel. Ten years later, after Fairbank closed shop, Joe moved on to Northern Star Mortgage, which eventually became Home Star, and finally became Opteum Financial Services. Joe served as senior vice president of sales at Opteum for seven years.
He was eventually recruited by Citi Residential Lending as senior vice president of sales to handle the company’s merger with Argent Mortgage/Ameriquest. Joe remained with Citi and worked on the team responsible for merging Citi’s mortgage units, Citi Residential Lending and Citi Mortgage. After a year-plus at Citi and a taste of what it was like working for a “big bank,” Joe signed on with Security Atlantic Mortgage Company as the company’s national sales manager. Today, Joe serves as director of national sales for REMN, and while he and the other members of senior management at REMN run the company, a corporate culture exists where it’s a transparent, hands-on experience for everyone … from senior management, to regional management, all the way to REMN’s network of brokers.
How did you first get started in the mortgage industry?
I started out in the hospitality industry over 25 years ago, and through the hospitality industry, my family owned a number of restaurants in Connecticut and New York. I originally went to school for hospitality management and hospitality development, and I know it’s a weird twist, but I grew tired of operating in the hospitality business. I got into mergers and acquisitions and business brokerage, and I specialized in selling restaurants, small hotels, wholesale distributorships, etc.
I rented an office space adjacent to a hard money lender and my business was booming. All of a sudden, in the late 1980s, the banks stopped loaning money to small business acquisitions, so my business dried up. I was done, and was forced to either go back into the hospitality business or pursue another career. So I went to the hard money lender down the hall and learned the mortgage business. I used his broker’s license to start a shop. I would share my revenue with him because it was his license, as regulations back then were not quite as stringent as they are today.
I was giving him checks every month, and after six months, he asked, “What’s this kid doing over there?” There was a significant amount of money coming my way, and I explained the mortgage brokerage business to him. He was a hard money lender, and that’s all he did, so it’s kind of funny how I got into the business.
I was recruited to go to Fairbank Mortgage around 1990. They had a retail business, but the wholesale channel was just coming of age, so we started a wholesale business in the northeast and quickly became a regional player. I was at Fairbank for nearly 10 years, as the Ford Consumer Finances of the world, GE, Advanta and other large companies started popping up around us and it was interesting that we were able to compete with a lot of those companies. They were much bigger and had deeper pockets than Fairbank.
Since the beginning of the wholesale business, I have mostly been, until recently, the little guy. I have always worked for the little entrepreneurial wholesaler and competed mightily with the big guys and it has worked out very well. It was good for my skills not to have all of the resources available, as you have to make the best of what you have.
In the late 1990s, all the big companies started to melt down and so did Fairbank. Colony was the New York name of the company, it was known as Fairbank everywhere else.
I was recruited to join Peter Norden and we started a wholesale company at the time, called Northern Star. We began regionally, got our licenses and started to grow.
We changed our name from Northern Star to Home Star, but eventually faced lawsuits because the name Home Star was taken. We did much research and chose the name Opteum Financial Services instead.
Opteum Financial grew to be a significant publicly traded, national wholesaler. I ran the eastern region of the country for Peter. We had a terrific seven- to eight-year run at Opteum. That was the first time I actually had resources to work with … different things to actually grow a company, such as marketing and bigger budgets. It was also at that time that we were able to sit back and watch all of the mistakes that the industry was making.
What was your next move?
Opteum Financial Services was in business for about seven years, 2000-2007, and I then moved onto Citi. I was recruited by Citi for the sole purpose of working on their acquisition of Argent Mortgage Company. I was actually placed in Argent and I worked there for nine months during the acquisition process, doing due diligence for that deal. This experience gave me exposure to not only the Citi corporate world, but the world of Argent and its parent company, Ameriquest, as well. The resulting company after the Argent purchase was named Citi Residential Lending and I ran their sales department.
What was it like working for a company as large as Citi Residential Lending?
It was both fun and exciting to work for a big company … and talk about resources … they had a lot of resources, but the challenge at Citi was you couldn’t just go and tap into those resources, whereas with Opteum Financial Services, your resources could be easily tapped into. It was a very “corporate” atmosphere, a more corporate lifestyle than I was accustomed to, and one in which everything took a village to accomplish something.
Then, Citi decided to merge Citi Mortgage and Citi Residential Lending, so I was put on the merger team to bring the two entities together. There were still remnants of the Argent and Ameriquest culture there, my job was to assist with the merger.
After my work on the merger, I was offered a position at Citi Mortgage as director of expanded lending. I stayed with Citi until they again re-organized, and I left to again to join a wholesale platform which is now part of REMN wholesale. That was approximately two years ago. That’s how we got to where we are today.
What are some of the tricks in merging two different corporate cultures?
It’s truthfully a complicated process due to what is going on in the industry. You have the changing of a corporate environment taking place, along with the total re-engineering of the mortgage lending landscape. You really have to listen and be very open-minded about what is taking place. You have to look at the two platforms and put the ego of the company aside and select the best culture, listening to both sides.
You can have a small company that is running fine on all cylinders operationally and is doing great in the sales department, but to scale it to a larger level is a whole new animal. Not every company is scalable. It’s all trial and error and you do make mistakes, but you must amend them and move on.
How does this trickle down to smaller mortgage brokers and bankers that are facing similar situations with mergers and acquisitions? Some are taking their independence and partnering with someone or becoming part of a larger organization through branch opportunities. Do you have any specific advice for these independent originators?
Some of the same elements that exist when you work blending the cultures of big companies together also exist on the smaller scale with brokers and bankers. I would say the same thing exists: You have to do what’s right for yourself and put your ego aside a little bit. You must make your decisions based on the actual fundamentals of today’s world. As a broker or a banker, you must decide what’s right for you and your employees, and not only what’s right for today or to get the company through the month, but what will get you through this next cycle of business as well.
What has led you to stay so committed to the wholesale channel and the broker channel?
I am, without any question, a business-to-business guy. I appreciate and enjoy working with other businesses, as opposed to consumers. Granted, my customers are the people who deal with the consumers, so I need them. I truly enjoy doing business with the broker. I enjoy how different brokers run their businesses and how they market for deals, and I’m intrigued with the whole retail sector. Although I’m in wholesale and that’s my commitment, I have to consider myself a retail guy because my customers are retail.
I was involved for many years with the Connecticut Mortgage Bankers Association (CMBA), and that involvement exposed me to the mortgage business on a grander scale. Just sitting in on meetings and talking with wholesale and retail mortgage professionals was very intriguing.
What is different about REMN compared to other wholesalers out there?
Prior to the re-engineering of our industry, there were multiple layers of management. The industry, at its peak, could afford to have regional sales managers, area sales managers, divisional sales managers, and on and on, and everyone was fat and happy.
Here at REMN, we have a different outlook on things, as we have about 50 account executives on the road nationally. We have a huge presence on the East Coast, the Midwest, in the Southeast, the Mid-Atlantic states, and we’re just really only just getting into the Texas and California regions.
The bottom line is that it costs more to originate a loan today than it did three years ago … a lot more, and by virtue, you’ve got to run your business a little bit leaner and a little meaner.
Our management structure is pretty simple at REMN. I’m the national director of sales, then there is the national sales manager, Carl Markman, and then we have five regional sales managers out there who are functioning salespeople. They actually have accounts and they manage accounts, as well as account executives. The sales structure is limited management, with major league access to the people who run the company. By “major league,” I mean there are no levels to go through.
Carl and myself have day-to-day transactional exposure to our account executives. It’s no longer a situation where somebody is running a company and nobody ever talks to them or gets face time with them because they are so far removed. A true benefit of a managerial structure like we have here at REMN is that I consider myself in the trenches with what’s going on with the broker market because we are so close to our account executives.
How does the quality of the files being submitted by brokers today compare to the quality of the files submitted just five years ago?
Overall quality is drastically improved. I hate to say it, but just five years ago, there were those who were not true mortgage professionals involved with the mortgage business. They jumped in and made a lot of money, and as a result, we as wholesalers were feeding Wall Street’s insatiable appetite for the paper that was being written. In many cases, the problem actually started in the field with the application being taken and then submitted to the wholesaler … the app was likely not properly processed or processed to a lesser quality. When it got to the wholesale level, investors were not as stringent as they are now. That mediocrity permeated from someone’s kitchen table or Internet site to the time when a poor quality file was submitted to the investor. .
The people who were not serious about the business and were in it to make a quick dollar are gone for the most part. The people who remain are the true fighters of the industry who have survived and are serious about the mortgage industry. They are serious about the continued existence of the industry.
You have got to deliver quality loans. We are a Ginnie Mae securitizer, quality is paramount to us, whether we are securitizing a loan or selling a loan to an investor.
The industry has been cleaned up, but that cleanup has come at an enormous cost. REMN alone has 20-30 additional employees than just a year ago in order to make sure that we are producing higher quality files. There are more checkpoints and more technology is involved.
I recently attended a few industry trade shows, and they were not mobbed like they were four to five years ago. The people who came to our booth to talk to us were concerned about the ongoing viability of the business and wanted to see our business continue to thrive. It’s definitely quality, not quantity, showing up at these trade shows, and I think that’s kind of what’s happening in the business.
Due to the past sins of Wall Street, do you think that there will be a total removal of that sin in the future as our government enacts its various forms of financial reform legislation?
I’ll admit that I do not know all the parameters of this legislation, and I don’t think anyone truly does know this legislation through and through. I think financial reform is one thing, but what I would like to see is overall mortgage reform.
Just talk about the cost of doing business as a wholesaler these days ... if you do business in multiple states, and REMN does business in more than 40 states, each one of them has different licensing requirements. Each state has different rules and regulations, from a disclosure standpoint, from a net worth standpoint, all these types of things. Those requirements, and again, there are many, cost money. Being a multiple state lender is an expensive proposition because you’ve got to be able to navigate through all of these different rules. Our computer system cost a fortune in order to remain in compliance in 50 different states, however, these costs are necessary. If there was national mortgage reform and everything was uniformly put on the table, it would probably translate into bringing the price of a mortgage down for the consumer.
The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) and the Nationwide Mortgage Licensing System (NMLS) are a big step forward in ensuring that the consumer is dealing with a competent and qualified loan officer.
Do you think actually that there are other regulations that are coming down the pipe specifically for the mortgage broker?
With all of the financial reform out there, I can understand why people are gravitating more toward branch opportunities. But, I think for a well-run mortgage broker company that runs their business considering compliance and delivering quality loans to the secondary market, there is enormous opportunity.
Do brokers who work with REMN have access to training?
Yes, we do assist with training. We also have an online help desk. We actually have two trainers who work out of our headquarters. We recently did another Good Faith Estimate (GFE) training session for our account executives because we think it’s critical that they know all the changes to the GFE, through and through. We have hour-long teleconferences for all of our account executives nationwide so that they can review the GFE situation. Whenever we roll out new products, we train them on it. We are training our account executives so that they can train their brokers.
What would you say are the top three things brokers consistently make mistakes on with the new GFE?
The ones that come immediately to mind are the mistake in the upfront mortgage insurance premium (MIP).. We see brokers not properly putting the yield spread premium (YSP) in the borrower credit section, and the other thing that we see quite a bit is that the mortgage transfer taxes are put in the wrong boxes. In some states, it’s a moot point, but in New York, it’s a big one.
Why should a broker do business with REMN as opposed to another wholesaler?
The big guys do a wonderful job at what they do. We put ourselves in a totally separate category. The level of service and communication you get from REMN is far superior to that of what you get from the bigger companies out there. I’ll specifically give you an idea of what I mean by that.
We’ve been interviewing and recruiting account executives nationwide. When I ask them why they are sitting across the table talking to me and interested in working for REMN … their main reason is turn times. Our account executives are in broker shops all day and they know the service levels out there with the bigger competitors of ours. We have built our entire company upon same-day turn times on new files that are submitted. So, if a file is submitted to REMN by 11:00 a.m., you will get an answer on that file that very same day. That is one of the cornerstones of what we do.
If you were a broker and you get your business from Realtors, it’s a beautiful thing to be able to send a file to REMN, and that day, the worst case the next day depending on the time the package was submitted, you will have an answer on whether or not the loan was approved. It’s a great retention tool for referral sources.
What lies ahead for the future of the mortgage broker? What do you say to those who are basically throwing in the towel and going to work for a net branch or are consider working for a bank? Do you have a message of hope or optimism for this group?
I think that the branching opportunity is not a bad option for some people. It could be ideal for someone looking for multiple state licenses, and someone looking to deal with the bonding issues that are out there today. Seeking assistance with the new education requirements is another good reason to join a branch.
That being said, I think there is a place in this market for the good, high-quality broker who runs their shop well, writes quality loans, gives quality education to his or her loan officers, and keeps on top of the latest in legislative and regulatory changes.
This is, by no means, Armageddon for mortgage brokers, but it has certainly cleared out the men from the boys and has forced quality back in the mortgage marketplace and has stepped up the standards of underwriting.
Do you have any closing comments?
I think that the relationship that we have here at REMN between management, senior managers and executive management, all the way down to our salespeople, is a transparent relationship that can be seen even by the brokers This relationship permeates right down to the broker shop.
I just walked into the office of one of my regional managers, and he has four files in his arms trying to get them done. What do we do? He’s there with the other senior managers trying to figure out how it’s going to get done, and that’s the type of hands-on mentality we exhibit here at REMN. Our success starts at the top and it trickles down. I enjoy a scenario where the business culture includes working with the very top of the management chain, all the way down to the broker.
Our very best brokers whom we have long-term relationships with are those who not only embrace doing business with REMN, but they embrace our culture and our commitment to customer service and loan quality.
If you’re on the same page with the broker as far as what the end results are—that’s a good relationship. If you embrace a culture of quality loans from quality originators with quality underwriters who deliver a quality finished product, those are the very best relationships that exist out there and that is what we have built REMN’s business on.
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