market. When these strong originators are out there asking and talking about what company to be with, our name pops up in a positive manner from all over the industry. We’ve worked very hard for that reputation. We have the physical space to grow; we have the financial strength to grow; and we have the relationships with the banks and the secondary markets to grow. I think that our reputation, as people are looking to go to quality, makes us a very good choice.
achieve as an originator was so serendipitous for us when our industry rapidly went back into what mortgage banking always has been, and frankly should be, to take those tools and be able to provide one of my mentors a home and to have Greg become our vice president of sales training. To have Greg Frost among our ranks proves that strength in this market by being our number one shop in 14 months, I tell you that is a pretty nice notch on my CEO belt. That was a great decision to bring Greg aboard. I am very fortunate to be such a good friend with Greg Frost and am very happy that he joined our organization.
O AUGUST 2009
Any closing comments on PRMI and the future of the company? I think PRMI is a unique mousetrap. It was built by a mortgage producer for mortgage producers with a heavy understanding and appreciation for the financial approach to the business that is going to be critical to maintaining the bank relationships that we’ll need as loans grow. Brokers will want a strong financial company that can implement strategy and systems to ensure the viability of the mortgage product. They did business with a lot of people who had poor practices in place, and when it came time to stand up and be counted, they couldn’t write the check. They are being cautious going forward. Net worth is critical. Companies with strong net worth will get you in the door and seated at the table to talk, but the investors today, the ones making the decision to buy loans from companies, are going to be coming in a looking at your quality control plan, your systems, your past performance history, loan performance and what happens if a loan stops performing. The quality of production is critical. The banks have a concern, once they open the door, about your net worth. Once you are in, they are more concerned about practices and procedures. They have a very low risk appetite, they are looking for companies that they feel comfortable with and have very best business practices, longevity, performance and the capability to actually originate a lot of quality business. The guys with the gold want to give the resources and capabilities to those who control more market share, the right way and with less risk. Those will be the winners going forward. These big banks are non-regulated bankers, you have to trust their best practices, you have to know that when they are originating a loan, it becomes a collateralworthy transaction that will perform exactly like everyone thinks it will perform. They are looking for companies that will provide them that product. There is a riskreward balance for them. The reward is stronger if you control more market share as a non-regulated bank. Controlling more market share and being able to funnel that into more conduits in the secondary market … that is the reward. If there is lower risk and higher reward, that is the recipe for who gets to win in the future.
MORTGAGE PROFESSIONAL MAGAZINE
do is basically weed out for a period of time, certain competitive forces. I think that companies need to stay sharp and be in strong financial positions and have the capability to grow. Companies that don’t have a strong growth plan over the course of the next two to three years are going to have challenges. I think its going to come in the form of liquidity, warehousing and secondary market offerings, whereas the industry overall will have an expectation of more business funneling in from less channels. Being one of those channels Explain PRMI’s warehouse capacity is the goal and if you are one of the and is there anything specific about companies that is still drawing and your company’s capacity that differ- have the capability of being a channel, entiates it from the competition? then the opportunities will be made I can tell you that my board of directors available to those companies in pricing will not think I have done my job if I am structure, adoption of products, not at a $1 billion per month by this time although it’ll be a while until we see next year … and that, by no means, is anything out side of vanilla products. the cap. We are funding $375 to $420 The broker community has some real million per month. We have the ability challenges ahead as early as 2010 and financially, with our banks, to more than 2011. Some of the new requirements in double our current production without disclosures, yield spread premiums, ever having to go to the table again. consolidation issues and wholesale concerns will continue to plague the broWhat are PRMI’s goals for a paperless kerage community. I think you’ll see a environment? great number of We were one of the brokers who first companies that “I often compare the loan process migrate and conadopted a paperless to an airplane. Before a plane can nect and consolifly, it needs all its parts: An environment very date into larger early on, and over the engine, a fuselage, a propeller, etc. organizations that last five years, have will help them If one of those elements were thoroughly explored compete in all of missing, it wouldn’t fly.” this environment. To those areas. date, we have fully I think that there paperless capabilities. We conduct business, is going to be loan officers over the course from the point of underwriting all the way of the next two to four years who are through the secondary market, in a fully going to have a couple of different busipaperless manner and are able to empow- ness cards with different logos on them. er any of our retail locations, branches or Because of this consolidation, there are divisions with paperless capabilities. We are going to be fewer choices as to where a very glad we adopted a paperless environ- professional originator sits down at the ment long ago, as it is a big part of our pro- desk. Undoubtedly, all of these things are ductivity and it keeps cost structures in line. arguably going to make it more difficult There are challenges with it, as the rest of for the consumer. With less competition, the industry has been slow to adopt the the consumer ultimately pays the price. paperless philosophy across the board. That’s a systemic issue. We, as a nation, Beyond just paperless mortgage bank- may be overshooting a bit in some areas, ing, there is also electronic connectivity but that’s been a norm for this county that we were very early adopters of, with and various industries and I think that to FHA, warehouse banks and different try to survive in the future, it’s a matter of ancillary resources. PRMI has always having the right connections and been an early adopter of technology and resources, and companies that are well being able to consolidate workloads to capitalized with amazing quality control. either automated systems, predictable You need to be one of those companies systems or paperless systems, we see an chosen to be a part of the future. increase in efficiency, productivity and accuracy in the mortgage process. Over a year ago, you partnered with When you walk into our Salt Lake City Greg Frost. Can you detail some headquarters, you won’t see any paper aspects of this partnership with a longfiles lying around the building. Everyone time top producer like Greg Frost? has two or three computer screens on The facts speak for themselves … what their desk and that’s how we do business. Greg Frost does works and is working for PRMI … not only because of the posiDo you see any major shifts in the tive feedback I’ve received from our mortgage market or is there anything managers and partners from his sales on the horizon that mortgage profes- calls and office visits for seminars, but I sionals need to be aware of? just look at his numbers. He has been I see massive consolidation in the with us for just 14 months, and he is our industry. There is still a lot of small number one shop in the country. We’ve mortgage companies that think we may been around for 11-years-plus, and Greg have seen the worst of the consolida- comes in and becomes our number one tion. I think that there is more forced shop. To do that is no small task. consolidation ahead and what that will The success that Greg has helped me
www.NationalMortgageProfessional.com O IDAHO
seasoned and have a good, steady book of business over a long period of time … not just during refi windows. We look to professionals who specialize in their market area. When you find a mortgage professional who specializes in their zone, their market only affords so many overall transactions and they will not survive in their market area purely on refis. These people work diligently to not only take care of refis in their own book of business and handle new business coming in, but they are always hitting the street, servicing the real estate agent, builder, certified public accountant (CPA) and their own sphere of influence. The type of mortgage originator we attract at PRMI is one of a specific personality, mindset and business plan. I think that, in this major industry disruption that we’ve seen, PRMI has had an opportunity over the past year to find more of those folks than we’ve ever had in the past. We have been a very good choice for mortgage professionals who depend on transparency and a system that allows them to have control over their service levels. We can go out and find very professional originators who demand the tools they need to compete and own their market and the Metropolitan Statistical Area (MSA) that they’re in. If we can provide these tools to them to own that MSA, the byproduct is a very healthy percentage of purchase activity. I think we are also seeing a flight to quality in the retail mortgage banking marketplace. Sharp mortgage professionals realize the game is changing and their “cheese” is being moved. They are looking for a solid performer in the industry with whom to associate with. We are seeing the number of people inquiring about our business model ratcheting up exponentially. The pendulum is swinging and the smart people out there who are top producers realize they must associate themselves with a well-capitalized company that can fund on time. So many out there are spending more time on underwriting and getting the loan to the closing table, than they did acquiring the loan, taking the application and getting it to the stage of it being reviewed by an underwriter. PRMI’s business model is unique as it answers all of these issues out there. It answers the throughput issue, as well as the financial stability issue. The table is set with PRMI and the word getting out is that people are understanding and interested in us. Pricing is now the third thing I am asked about when people are inquiring on whether to do business with us. The first question I am asked is usually about our quality: “How deep is your bench and how financially stable are you?” The second question is usually a service-related inquiry involving underwriting, and the third question I am asked often involves pricing. At PRMI, we’ve kept a great reputation in the industry, not only to retail mortgage companies, but also as an enterprise in the mortgage banking arena. We’ve been solid over the years and that strong reputation bleeds all the way around the industry, not only to the origination community, but the ancillary community and the secondary
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