Twenty years ago, Robert Senko founded a small mortgage origination shop called All Credit Considered Mortgage Inc. (ACC Mortgage), just outside of Washington, D.C. In the early days, the company was only licensed in three states and sold mortgages direct to consumer. Over time, Senko built the company into a thriving business, serving borrowers in 25 states by offering products that other lenders wouldn’t.
Today, Senko is president of one of the leading non-QM wholesale mortgage lenders in the country and we feature the company as this month’s Legend of Lending.
Senko spoke to us from the company’s headquarters in Rockville, Md. about the changes he’s seen in the mortgage industry and where the opportunities are for brokers and loan officers serving today’s borrowers.
Thriving in a turbulent industry
Many would likely agree that 1999 was a great time to start a mortgage business. With falling interest rates and rising property values, the industry was exploding. Anyone lending at the time likely saw their volumes increase three-fold or more as national lending volume exploded from traditionally less than $1 trillion annually to more than $3 trillion by 2007.
When Senko was recognized as our Mortgage Professional of the Month, last October, he told us the story of how he survived the historic downturn.
“Leading up to January of 2007, I started hearing and sensing some capital market issues that reminded me of the late 90’s when Long Term Capital Management collapsed, and good companies seemingly shuttered overnight,” said Senko. “On a gut feeling, I sold all of the loans in our portfolio, moved my personal wealth from stocks to cash and exited the private money business. Six weeks later, New Century collapsed, then came the days of the Implode-A-Meter and the daily news of companies closing.”
When it was all over, some of the nation’s largest B&C lenders were gone, but Senko’s ACC Mortgage was alive ready to lend.
There were still tough times ahead, but over the next decade, Senko would lead a changing company through an industry and market that were being rocked by changes of their own.
Senko’s view of a changing mortgage business
When ACC was launched, it was a non-QM lender, for the most part, but was also primarily a retail shop. After the crash, Senko found that his company still had capital to lend, so he started sharing what he knew about these non-conforming borrowers with brokers and took his company into the wholesale lending business.
Today, ACC employs a team of wholesale account executives, who create relationships with brokers, and they are looking to grow to 50, and 50 only, account executives. According to Robert, ACC is the oldest non-QM lender and they do not want to be the biggest, they just want to be the best. Less is more in Robert’s opinion.
“When I was an account executive, back in the mid-1990s, I put on my jacket and tie, got into my car and I drove up and down Rockville pike, visiting with mortgage brokers,” Senko said.
In those days, there were so many mortgage brokerages that it was easy to stay busy visiting them. “Those days are behind us,” he says.
Today, Senko says his successful AEs do up to 80 percent of their work over their cellphones, with many of them working from wherever they happen to be. Most of that time is answering broker questions and helping them structure non-QM deals.
It’s not just Senko’s AEs who are working remotely these days. ACC has a team of processors, underwriters and disclosure managers working from its corporate headquarters, but the company also has remote employees, something the firm didn’t do in the early days.
“Even loan officers aren't pinned to their desks anymore,” Senko said. “They're working remotely from their homes. So, that's a big change we’ve seen as people aren't working from a singular location. And that is something that I never really would have anticipated just a few years ago.”
Providing differentiation for the broker and loan officer
What hasn’t changed for brokers is that the market is just as competitive for third-party originators as it was when Senko started his business. While he remains committed to brokers, saying they offer consumers more financing options, he says brokers and loan officers need a way to differentiate themselves in the market.
“The financial world works best when you have a diversification of financing sources,” Senko said. “We don't want the government to be the sole provider of mortgage funding for the United States.”
Senko says, “Having unique private lenders is not just good for the borrowers, it’s good for the industry because it mitigates risk and protects the system. I think it really helps benefit the market to spread any risk around but also to create products that are manageable, affordable, and ultimately safe for both the consumer and the investors.”
But the real advantage to a diversified financial services industry can be felt in the broker’s shop. “Whether they're a broker or a loan officer working for a company, they really are entrepreneurs. Having companies like ACC Mortgage gives them more tools for their belt that they can use when they come across a potential client.”
Senko remembers his early days as a loan officer, working for a financial institution that offered only a limited menu of financial products. He found it frustrating because there were many borrowers he simply couldn’t service. One of his goals with ACC Mortgage was to fight that kind of commoditization and offer a wider range of financing options.
“For so many borrowers, it comes down to finding the cheapest price and the quickest close,” Senko said, but added that this won’t work for every borrower and it doesn’t serve the broker. “The products we offer give the brokers a differentiation. We don't have a DU/LP-type underwriting engine. These loans are really manual. You have to look at them, you have to manually underwrite and review them. It’s not just a couple of keystrokes in the computer and here's your approval. That is why it is important to work with an experienced non-QM lender.”
This gives the broker the opportunity to be a real partner to referral sources and help borrowers that don’t fit into the box provided by government investors. But it also requires a trained loan originator who knows how to write non-QM loans. To help loan officers new to non-QM, ACC officers a “White Glove” service for their first couple of loans to get them comfortable.
Lessons for the broker
But what does that mean, exactly? We asked Senko what he would tell brokers without experience in the non-QM space but who wanted to begin selling these products.
“Set proper expectations from the first moment,” he said. “I think the struggle that loan officers have had adapting to the non-QM world is they expect the deal to be a GSE-type transaction and that's just not the case. This is good old fashioned, manual, roll-up-your-sleeves lending. It’s sometimes easier for guys like me. I was trained when we were doing handwritten 1003s!”
Senko says that he learned things from a manual perspective, but admits that today that’s a bit of a lost art. But it’s not a requirement for getting this job done. Loan officers just need to partner with the right non-QM lender.
“As they pivot and they start working on non-QM after a career of just doing GSE-type lending, it requires a lot more attention to detail,” Senko said. “Today’s brokers are quick studies. We help them figure it out.”
He says the loan officers that his company has trained are smart, adaptable and entrepreneurial. He says today’s brokers are nimble.
To be successful, he trains them to set expectations right up front, with the real estate agent and the client, telling them: “This is a loan we can do, but we need a lot more detail to get it done. This is going to take some level of work.
Senko says brokers who learn to do this set the tone for the relationship and find that people won’t become frustrated with the process.
Secret to success
Senko says, the key to success for the broker, is managing expectations for a better borrower experience. But what about his own secret for success?
“I think my secret has been transparency,” he replied. “You need to let people see your vulnerabilities by being honest. I think that's why I have people that have been with me and my company for over 20 years.”
Loyalty happens when there is trust, Senko said. It’s something people want to find, in the people they do business with and in the companies they work in.
“It’s amazing to me to hear so many stories from people that come to us from other companies about how they were essentially lied to,” said Senko. “I tell people the good, the bad and the ugly.”
At ACC, determining what is a good loan, comes down to three basic rules. Senko calls them his rules for good lending, and it comes down to a simple three-point lending philosophy that he says remains as relevant today as it did when he started this company 20 years ago …
►First, the ability to repay: Let’s prove their income before we lend. This was before TRID.
►Second, skin in the game: Borrower and lender. If the loan doesn’t work, everyone needs to feel pain.
►Third, benefit to the borrower: This drives everything we do. Are we doing a good loan for the borrower?
If everyone understands these three things and you remain transparent through the process, success is all but guaranteed, Senko says.
“I think that's been my greatest asset, that complete transparency, whether it's with a client or a broker,” Senko said.
Further highlighting the point of transparency, the company sends an introductory letter from Senko himself with each Conditional Loan Approval. If the broker is having an issue or concern, they can send an e-mail directly to Senko and he will address it personally. Brokers appreciate the accountability from the man at the top.
Getting involved with ACC Mortgage
Find out more about ACC Mortgage and getting involved with its industry-leading non-QM business is a simple process. To find out more, visit the company’s Web site at ACCMortgage.com
Rick Grant is special reports editor for
National Mortgage Professional Magazine and Mortgage News Network. He may be reached by phone at (570) 497-1026 or e-mail [email protected].