It's been a change for the better…
After 25 years as an executive at Wells Fargo, Michael Johnston (pictured) was ready to take on a new challenge with a much smaller and independent mortgage firm, Sprout.
The move over a month ago was a bit of a culture shock for Johnston, who had been used to working in a more disciplined and structured environment, having led large teams of up to 800 people, sometimes during wildly fluctuating business cycles.
But in his view the change has been for the better, with Johnston set to play a key role in expanding Sprout’s consumer and retail sales channel as the head of distributed retail, dealing mostly with realtors, builders and financial planners.
“Coming to Sprout Mortgage has been a wonderful experience. There are only a few decision makers in the organization, and many of those decisions are being made very quickly between the president, Shea Pallante, the CEO, Michael Strauss, and myself,” he said.
Johnston hinted that Sprout’s agile decision-making process, a hallmark of small companies, was a feature he’d be able to exploit for the benefit of his new employers. “We won’t have the challenges, certainly early on, of being a large company, and that means we’re a flatter organization that is also able to make very quick decisions for our team and for our customers,” he said, relishing Sprout’s “boutique feel.”
Sprout’s overall business approach, which he described as “innovative”, was also cause for celebration. He said: “It’s not just in the development of the product but the execution.”
Despite the “tight inventory”, which Johnston attributed as much to a decade-long deficit in home building as to the recent rise in construction costs, he said the industry would adapt without too much difficulty, adding that Sprout was well placed to take advantage of current market trends.
“It’s likely that interest rates will start to step up a little bit over the next few years from where they are today,” he said. “The composition of the market will become a little bit more purchase and less refinance, as many homeowners have locked into rates that are sub 3% or so.
“What will happen for lenders - and especially loan officers that are out in the market - is that they’ll be in demand for more products, such as the jumbo non-conforming products and direct access to the non-QM product, to offset some of the production written previously for refinance.”
Johnston noted with interest that there had been a positive response to last year’s additional loan options for people who were not qualified but were considered credit-worthy borrowers.
“There’s been a great demand for the product, and I think it’s been down to a few things. One is the relationship that our CEO Michael Strauss has built with investors, primarily on Wall Street,” he said.
“Investors who may not have been as comfortable with non-QM products in the past wanted to take some time to see what the performance for those products was like. But Michael has a stellar reputation with investors, and they are now buying the product because in this low interest rate environment there’s not many places where they can find yield.”
