Part II: Successfully reinventing the
First Magnus Financial Corporation reinvents the wheel on an ongoing basis to meet the entrepreneurial needs of their clients and the marketplace. The company began its life in a small apartment in Tucson, Ariz. Since then, founding members CEO G.S. Jaggi, COO Karl F.W. Young, CFO Gary K. Malis and CTO Dominick E. Marchetti have led First Magnus Financial Corporation to become one of the largest privately held mortgage companies in the United States, with more than 300 offices and more than 5,400 employees in 38 states. The company came off an astonishing 65 percent growth rate in 2005 and set another company record for 2006, handling more than 160,000 transactions and $30 billion in mortgages. In this continuation of "The Mortgage Press Frontline Series Profile: First Magnus Financial Corporation," The Mortgage Press discusses the company's use of technology and its involvement in the mortgage broker community with First Magnus' executive team.
According to COO Karl Young, "We've done a very good job under Gary Malis' supervision of wrapping our arms around an ever-expanding product environment over the last several years." He added, "Dominick [Marchetti] has been able to take our technology and wrap it around our product offerings, thereby creating a platform that makes it very easy for our broker partners to navigate through that increased product offering. It can be pretty overwhelming; a broker may have to go through several different wholesalers to hone in on who has got the best combination of product and price for a particular scenario and have to go to another wholesaler for another scenario."
Marchetti pointed out that this had a lot to do with how First Magnus chose to focus on mortgage brokers from the beginning. The company started in 1996, at a time when many of its competitors were focusing on using technology to bypass mortgage brokers and go after consumers directly. "If you look at the eLoans and Mortgage.coms, they were invested very heavily in that direction," said Marchetti. "First Magnus took a very different approach. We tried to focus on building in some of the efficiencies and scale of automation." After eight years, this has allowed the company to open up the veil on the mortgage process. Marchetti added, "If you look at our competitors, they don't really expose how a loan is moving through the process - what forms are required, deadlines, loan status and what fees are needed along the way. We've done a really good job of exposing the mortgage process."
First Magnus emphasizes ongoing technological development as opposed to focusing on day to day operational technology. Marchetti feels that it's imperative to always be looking at their current state of technology and ensuring that it is state-of-the-art. "If you just look at technology generally, if you buy an iPod, three weeks later it's outdated and just to keep up, you have to buy another iPod. Well, it works exactly the same in the mortgage business," said Marchetti. He noted that many of First Magnus' competitors either purchase off-the-shelf applications or have legacy systems that, in some cases, are more than 30 years old. They are then forced to rely on outside vendors or consultants to solve problems or add new features that the marketplace is demanding.
According to Marchetti, "There is really a night and day difference in what we are doing. We don't have any legacy applications; everything that we have, we built from the ground up and have continued to make modifications to the point where our software is indistinguishable from our business process. We've built into our software features that the brokers have been demanding." Marchetti continued, stating that there is constant development going on and, at any given time, the company has about 50 simultaneous projects in the pipeline.
Young added, "Our technology platform is a living, breathing organism, and there are teams of people working on it all day every day. And they have good working relationships with our sales personnel and have become mortgage professionals who know more about what it takes to get a loan in and out the door than I do."
Marchetti said that First Magnus puts a lot of effort into training brokers, including having a group of online help personnel who also go out in the field to do training for mortgage brokers, Webex training, 24-hour e-mail chat and a one-minute response time for brokers who call First Magnus' phone support line for help. The company's training teams do technology demonstrations and make themselves available to help brokers with their questions. All of this is done with an eye toward keeping their technology user-friendly and making their broker customers as comfortable as possible.
"We get a lot of accolades from the broker community. It definitely helps us to grow our customer base. You can have great tools, but if you can't find your way through them, then it makes it very difficult," Marchetti said. "We have made a huge commitment to making sure things are very simple. And it takes a lot of energy, a lot of resources and significant capital to make something so complex very simple."
This commitment to a broker-centric business philosophy translates to First Magnus' relationship with the National Association of Mortgage Brokers and its state affiliates. In 2006, the company won the NAMB Affiliate of the Year Award for the second time in three years. First Magnus has also won accolades from NAMB's state affiliates, such as the California Association of Mortgage Brokers, which named the company as its Affiliate Company of the Year for the fourth year in a row. Gary Baraff, First Magnus' director of business development, sits on the board of directors of NAMB and serves on several of its committees.
"The partnership between First Magnus and NAMB is a good one," said Young. "With as active as he [Baraff] is, when you combine that with a lender like First Magnus who has the interest and the ability to effect change in the industry, I think many in the industry see First Magnus as being in a very good position to help drive the future of the industry. We've had the benefit of a lot of the people who are involved at NAMB working with a number of the state [association] presidents. In several markets, First Magnus has come in during the past few years, rolled up our sleeves and got involved at the state level. Many branches and regional people are very passionate about getting involved." He noted that from the company's perspective, too few of First Magnus' Broker Partners are members of NAMB and that Baraff is putting a lot of effort into changing that.