Citadel moves into correspondent lending in a big way
25 Apr 2017
“We’re making a big push in correspondent lending,” said Will Fisher, senior vice president and national sales and marketing director for CSC. “We’re signing up as many as three to five correspondents per week. We’re making a bigger push to purchase pools of loans. We have several pools in process that we’re just finishing diligence on.”
Of course, non-QM loans are different animals than more traditional Fannie and Freddie products. That’s why CSC makes certain its correspondents are comfortable with the business.
“What’s different is that we provide a thorough underwriting training to all our correspondent partners,” Fisher said. “We prefer to do it at our headquarters in Irvine, but we can also do it via webinar. We really hold their hand through the whole process in the hopes that we can turn our flow sellers into bulk sellers.”
The difference between flow sellers and bulk sellers is principally one of oversight. Flow sellers send the loan information to CSC at several points during the process so that CSC can spot-check the loan and provide immediate feedback to its sellers regarding purchase eligibility. This alleviates some of the risk associated with originating non-QM. Bulk sellers, on the other hand, have enough expertise that they can handle the application and underwriting process entirely on their own, and send a complete closed loan to CSC for purchase.
In fact, CSC will review and bid bulk sellers loans underwritten to other companies’ non-QM guidelines.
“If they underwrite to a certain set of guidelines that are not ours, but they’re within the scope of what we do and the yield is right, we’ll price those pools as well,” Fisher said.
“It makes sense for CSC to make a strong push on correspondent lending right now,” Fisher said.
“We’re tracking really good volumes in our wholesale; we’re continuing to grow in wholesale and in retail as well,” he said. “This product is an easy way for originators to supplement and increase revenue that is vanishing from decreasing refi volume.”
CSC correspondent lenders should have a net worth of at least $1 million and have been in business – with a good track record – for at least five years. CSC looks for its correspondent partners to deliver a minimum of $1 million to $2 million per month in volume, Fisher said.
“The correspondent sellers can still get our full menu,” he said. “They get our non-prime and Maggi Plus products. They also have the option, if they want, to originate our outside-Dodd-Frank product, through our wholesale channel.”
CSC is also rolling out a new pricing engine for its correspondent sellers this week.
“They’ll get access to that pricing engine once they’re signed up as a correspondent,” Fisher said.