Wholesale lender showcases products toward bolstered market share
In lean times when once-brisk business slows, as is being experienced in the mortgage industry, it’s important to cast as wide a net as possible in snagging new business. To that end, officials at The Loan Store (TLS) aim to teach brokers how to fish.
In an interview with Mortgage Professional America, TLS’s chief revenue officer Will Pendleton (pictured) showcased an array of products designed to aid brokers amid a decline in homebuying demand. “At our core, we are broker advocates,” he began. “What we’re doing is evaluating the market environment, taking a look at market conditions, market trends, consumer demand and we’re trying to allocate our energy and focus toward products that solve the need now while empowering the broker to navigate rough waters.”
To help in that navigation, TLS recently launched a three-day funding HELOC, intensified the spotlight on its “Buy Before You Sell” product, and showcased its ownership of a private money lender providing hard money loans to investors.
In explaining what prompted the offerings, Pendleton neatly encapsulated the current market conditions: “Some of the products we’re focused on and that we’ve released you can consider counter-cyclical in a way,” he explained. “The good part of the cycle for the overall industry is when rates are low, everybody is financing their book of business, and money and equity flow freely. We’re obviously not in that part of the cycle.”
Instead, homeowners are sitting on the sidelines before purchasing another property as they guard their low, locked-in rates secured in better times. “When you look at the higher interest rates side of this cycle, what works? When a consumer has a 2.5% primary mortgage, they don’t want to interrupt that, nor should they. It’s not the right financial decision for them. So there is a certain amount of trapped energy or demand as a result of the majority of the people having such low interest rates on their primary mortgage, it creates a need for other specialized products to give consumers what they need.”
The reason for that lies in consumer spending patterns: “The fact is, the American consumer is still spending at a very high rate,” Pendleton said. “Revolving debt is a situation for us to monitor. Obviously, it continues to increase and is at record levels, and if they’re not going to be able to access what is their largest asset to manage their debt, then what can we do?”
He answered by ticking off the company’s various options.
It all starts with HELOCs
“Obviously, the first solution for that is going to be home equity lines of credit,” he said. “Our first step into HELOCs is actually a very exciting one because we’ve partnered with a technology company to deliver a really fast and convenient solution for consumers.”
To that end, the lender offers HELOCS ensuring access to funds within five days – a far cry from the time offered by legacy lenders, he noted. What’s more, he said, the process also comes at a better cost than taking out a personal loan. Given such benefits, TLS is training brokers who may not typically do a lot of HELOCs on how to sell them to ramp up volume, he added.
“Obviously, the fastest way for a consumer to get money is to get a personal loan, and they’re going to pay a premium for it,” Pendleton said. “HELOC is in the middle. It’s more efficient and less costly than a personal loan.” The automated, technology-aided method beats traditional methods, he said, in relating personal experience. “I can tell you, being a consumer who built a home a couple of years ago and accessed a traditional home equity line through a bank,” he asserted, “that process took 95 days and three appraisals and was not fun.”
He explained the product’s benefits to loan originators: “If an originator is sending a traditional HELOC, they’re having to collect a lot of documentation and do basically a full underwrite,” he said, contrasting it to the TLS model heavy on automated valuation methodology. “And that’s why it’s so fast,” he said. “It also makes it a light lift for the originator. The originator is not having to pay a processor, they’re netting more compensation for their efforts, and they’re not having to spend the time and energy that a normal, back-and-forth process would demand.”
Other products are extolled
On another front, TLS has heightened awareness of its “Buy Before You Sell” product that essentially offers a zero-interest line of credit to leverage that equity as a down payment on a new home without having to sell their current home as a term of purchasing the new one. Pendleton said TLS is the only wholesale lender offering the product, which will have expanded to 38 states, by the third quarter, from the current seven markets where it’s made available.
Lastly, Pendleton highlighted TLS’s ownership of Old North Capital Fund yielding hard money loans to investors – bridge financing, fix & flips, transactional loans, new construction, and the like.
Learn more about what is bridge financing and how does it work in this article.
“When the going gets tough, you have to be aligned with people who can help you feed your family,” Pendleton said in reference to beleaguered brokers seeking greater market share in an ever-competitive field. “We have to deliver those options.”
The product offerings have emerged as The Loan Store experiences exponential growth following its purchase of the wholesale channel once owned by Homepoint – billed prior to the transaction as the third-largest wholesale lender by origination volume.
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