Hello, LOs!
In 2020, the name of the game was capacity. Thousands of lenders scrambled to bring on LOs, processors, underwriters and managers to handle the volume. For some lenders, that mad scramble meant changing their long-term strategy to capture the opportunity in front of them.
So let's talk about one such firm, Ann Arbor, Michigan-based Homepoint.
On Monday, the wholesale-only shop announced that it would be reorganizing its teams into more of a regionalized service model for brokers. It means there will be layoffs. The company said the reorganization would reduce staff by "less than 10% in total, many of whom were temporary associates hired last year to help us meet the increased demand during the refinance boom." Homepoint is believed to have around 4,000 workers.
Like other lenders, Homepoint's margins have been narrowing amid a larger price war in wholesale and a decline in refi activity.
I spoke to Phil Shoemaker, Homepoint's head of originations, to learn more about what prompted the reorganization and why they see it as more efficient.
Shoemaker told me that Homepoint's overall strategy has long been to build a wholesale lender at scale that has an in-market presence and leverages local relationships, with experienced operations personnel behind them.
Essentially, the belief is that when sales and operations staff work together as part of a dedicated team, communication is better, which reduces touch points in nuanced markets. So that was the plan.
And then 2020 hit.
"The lenders that won in 2020 understood that the valuable commodity was capacity, irrespective of what it looked like," Shoemaker said. "In 2020 we focused on just how quickly we could build capacity. That's why Homepoint was the fastest-growing wholesale lender. We're proud of that, we think we took full advantage of the market, but now that we're shifting back into a purchase market we're getting back to our roots."
Ops and sales teams will now be aligned by region. And within that, they'll have pods of people aligned with certain accounts and certain sales people, Shoemaker said.
"It becomes very efficient to communicate and it allows you to be super nimble because those brokers are dealing with someone that's very experienced and empowered to make decisions on the spot."
I'm curious to hear how the brokers out there feel about this and if they have dealt with the new system at Homepoint.
It seems to me that a lot of lenders have very bifurcated operations, where more workers are performing a narrower series of tasks. So while it theoretically reduces the number of errors, workers have less control or insight into the big picture. That can lead to frustration from brokers. It seems like Homepoint is entrusting fewer people with more control over the process.
Reach out to me anonymously at jkleimann@housingwire.com.
James Kleimann
Managing Editor, HousingWire
EmoticonEmoticon