Executive talks focus areas as refinancing uptick looms
The relationship between mortgage brokers and lenders is one of the most crucial contributors to success for both parties – and lenders can play a key role in convincing loan officers of the merits of building and growing in the wholesale channel, according to a top executive in the space.
Michael Brenning (pictured top), head of production at American Financial Resources (AFR), told Mortgage Professional America that lenders had the ability to help LOs get over what might be described as a fear of ownership and striking out on their own.
The educational value that lenders can bring, he said, shouldn’t be understated. “There are so many broker-to-box concepts that any lender like us, or UWM, or Rocket can [use to] help people come out of retail, and help them form their own broker shop,” he said.
“And I think that’s probably the biggest impediment to seeing more mortgage brokers start their own companies and leave the broker shop they’re at: they don’t know what it takes to set up a broker shop.”
Availing of companies offering help with that – and organizations like the Association of Independent Mortgage Experts (AIME), at whose annual conference in New Orleans Brenning was speaking – should be top of mind for LOs, he said.
Is a refinancing jump on the way?
A welcome recent drop in mortgage rates has raised the prospect of an uptick in refinancing – whether rate and term, interest rate reduction refinance loan (IRRRL), or streamline refis.
AFR has ramped up its focus on the refinance front, according to Brenning, launching a product that also addresses the thorny issue of trigger leads in the mortgage space.
That streamline refinance product sees the company use a soft-pull credit report rather than a hard pull. “If you think about what’s going on in the industry for the last four or five years, credit triggers are the bane of [mortgage professionals],” he explained.
The mortgage market is shifting, and AIME’s Jonathon Haddad says it’s time for brokers to embrace a mindset of opportunity. With new tech and market trends, there’s a huge chance to grow and succeed!https://t.co/tplyUM1UDD
— Mortgage Professional America Magazine (@MPAMagazineUS) September 16, 2024
“Everybody that’s not a direct-to-consumer shop hates trigger leads. That’s why there’s legislation on the Hill right now to quickly eliminate those, so to protect our brokers and their clients from the credit triggers, we allow for a soft pull on streamline.”
An emphasis on education of the broker community has also come to the fore, not least around clarifying the differences and similarities between IRRRLs and streamline. “The two products are often lumped together,” Brenning said.
“People think of an IRRRL and a streamline as the same thing for FHA – and they’re not. There are wildly different guidelines and [on an IRRRL] you can actually build the loan amount up a little bit to cover closing costs, to rebuild your escrow – which you can’t do with an FHA streamline.”
When it comes to the refinance outlook for the months ahead, much will depend on whether rates continue their downward trajectory. The Federal Reserve is scheduled to meet today, with a rate cut a near-certainty – and the only debate seemingly surrounding the likely size of that reduction.
If the Fed embarks on a rate-cutting cycle, “I think we can make a solid argument that a month from now, two months from now, there’s going to be a really solid IRRRL, streamline market,” Brenning said.
“And so, through education and product literacy, along with our… streamline products and concept, we’re helping the broker community get prepared.”
Adopting the mentality of a “restart-up” in the mortgage space
AFR may have been an established player in the mortgage market for 27 years – but Brenning said it’s describing itself as a “restart-up” because of a raft of new changes that have recently taken place at the company.
In February, it was acquired by Proprietary Capital, a Denver, Colorado-based investment management company with a specialty of investing in mortgage servicing rights (MSR).
The new parent company brings a “strategic advantage” to AFR, according to Brenning: namely, the ability to control the accounting and finance side of the MSR without being required to sell or transfer it out.
A host of leadership changes, meanwhile, have also equipped the company with new ideas, tech and processes to serve brokers. “We really want the broker community to know that we’re new as it relates to our product offering,” he said. “We’re not just OTC and reno. We’re a market leader now in conventional pricing below $400,000… we’re going mainstream. That’s the biggest change.”
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
