Let's Make A Deal, Bro
Why Homebridge’s CEO sold his retail division to CMG Mortgage
Peter Norden, the CEO of Homebridge Financial Services, had no desire to get rid of his retail platform, but that’s exactly what he did this week.
“I believe you have to have critical mass, and Chris George is the best of friends,” Norden said of the CEO of CMG Mortgage Inc., which acquired the retail platform this week.
The two CEOs, according to Norden, talked on and off about a deal for Homebridge’s retail division for five years.
“When push came to shove, it made sense to me,” Norden said Tuesday in an interview with National Mortgage Professional.
Norden said George talked him into the deal, but he wouldn’t do it without also selling him $27.5 million in mortgage servicing rights.
“Would I have done this deal with anyone else but Chris George? Absolutely, positively not,” Norden said.
Homebridge and CMG, he said, are the only ones of their size with the same culture. Norden said he treats his employees like his second family and that he broke down in tears when he delivered the news.
He expects George will keep all of the retail platform's employees, and that the only thing that will change is the name because there is no geographical overlap between the distributive retail branches.
Norden said George insisted on the MSRs going with the 180 retail branches across 30 states because, at some point when rates hit 5% again, he doesn’t want his team to worry about losing those refinance customers.
“He wanted the sales force to understand that he is buying the servicing portfolio so that all of the data and all of the customer contact information is going with them,” Norden said. “When rates do drop, the opportunity to refinance their existing customers would be there because there wouldn’t be any restrictions.”
“That does not mean that we aren’t going to build servicing back up,” Norden said. “Well, Homebridge will. I am actually going to CMG.”
In an unusual move, Norden is going to work for George as an executive advisor. He said Homebridge’s two wholesale divisions will continue to report to Homebridge President Joel Katz.
Norden said CMG and Homebridge have been successful, even during 2022, which was a tough year for many in the industry.
He said George has $100 billion in servicing and little debt. “His company is in a great position, really, to take advantage of everything going on.”
When it comes to wholesale, Norden said he’s a profit-driven guy.
“I like the broker community. I think the broker community has expanded pretty rapidly,” he said. “UWM has certainly made it very difficult in the broker world. I’m not going to deny that, but for me, it’s more part of a plan to build the servicing back and going further with it."
When rates do come down, he said, there will be an opportunity to expand wholesale dramatically. But when will that be?
Norden expects mortgage rates to come back down in the fourth quarter of this year. Earlier this year, he said, he was confident it would be the second quarter, but things changed.
“I think short-term rates are going to continue to skyrocket,” he said.