The recent changes to the Federal Housing Finance Agency (FHFA) leadership and regulatory environment will greatly affect the broker community, products and services. HousingWire recently sat down for a conversation with Flagstar Bank President of Mortgage Lee Smith and SVP of National Sales for TPO John Gibson to discuss how brokers can continue to maintain momentum even with these changes.
HousingWire: There were recent changes to leadership in the Federal Housing Finance Agency (FHFA) that are going to impact the broker community. What were the changes and how is that going to impact the broker community?
Lee Smith: With the appointment of Sandra Thompson as acting director of the FHFA in June, the agency is going to be more focused on affordability, risk management and liquidity. And that’s good news for consumers, brokers and the industry as a whole.
Thompson’s decision to eliminate the adverse market refinance fee, which added several basis points to the cost of every refinanced agency loan over $125,000, is pro-consumer, increases the competitiveness of GSE loans and should be positive for prospective refinance customers.
John Gibson: We’re hearing rumblings about more affordable housing options under the new leadership, and any expansion in offerings should be good for originators. The question now is about other caps, such as the sale of investment properties and GSE limits on purchases via the cash window, and whether we’ll see any movement there.
HW: How can lenders maintain momentum with the Government Sponsored Enterprise (GSE) investor property cap?
LS: Earlier this year the Federal Housing Finance Agency imposed a 7% cap on purchases of second-home and investment property mortgages from any one lender. This obviously caused many lenders to re-think their sales strategies around non-owner-occupied loans.
We believe we have an advantage at Flagstar. As a bank, we not only have a balance sheet and are well-capitalized—which means we can put loans into our portfolio—but we also have a robust residential mortgage-backed securities program. We’re the perfect partner for brokers originating non-owner-occupied loans and looking for an aggregator to sell those loans to. In the second quarter, we were the third largest RMBS issuer in the country, with two of those securitizations being for non-owner-occupied loans. And we have more securitizations planned for the remainder of this year.
HW: How does Flagstar Bank help brokers maintain their business even as the industry continues to evolve?
JG: The industry is evolving and change is the norm. At Flagstar, we’re always looking at the products and services we provide our business partners to find ways to help them grow. Flagstar has been in the TPO business for almost 35 years. We’re one of the only federally regulated entities operating in the broker space. For us, it’s all about listening to our broker partners, making investments to give them ease of use, and counseling, educating and advising.
From a secondary and capital markets perspective, we have some of the best minds and leaders in the industry at Flagstar. They bring value to our broker relationships that are unbeatable. And as our merger with New York Community Bank unfolds, the ability to expand our product set and become more strategic and more innovative will only grow. Ultimately, it’s about more resources to support our brokers and deliver the best, most diverse products available.
HW: What changes in the mortgage industry should brokers and lenders focus on the most right now and why?
LS: There are a lot of changes happening in the mortgage industry right now, and all participants need to be flexible and nimble enough to react.
We’ve already discussed the changes at the FHFA, but the regulatory environment, in general, is likely to get tougher and technology is likely to continue to disrupt the industry as consumers become ever more comfortable using their mobile devices and other technologies to conduct business. Finally, Ginnie Mae has a proposal out for comment around eligibility requirements for single-family MBS issuers which could impact the landscape in Ginnie Mae markets.
With respect to technology, we continue to invest in it to improve the customer experience for our brokers—and ultimately our borrowers—and to ensure that doing business with Flagstar is seamless and easy. Besides making direct investments in technology, we also partner with fintechs that we believe can help make us better, more efficient and improve the overall customer experience. We’re open-minded but focused on a great experience for our customers and partners.
Finally, as I’ve mentioned, our balance sheet and diversified mortgage platform give us a lot of flexibility and options to pivot quickly and find opportunities, depending on how regulations and agency guidelines change.
HW: You mentioned that Flagstar has really helped brokers excel in their business. Can you elaborate on what that means?
JG: Something we do really well is help our brokers transition to correspondents—and we’ve been doing it for decades. You can start off as a broker with Flagstar, then move to a non-delegated correspondent, then a delegated correspondent, then into bulk loan delivery. We’ll support you every step of the way, with training, nurturing and the guidance of our experienced account executives. And once you’re a correspondent, we can help you secure warehouse lines of credit. We understand the collateral, and we’re comfortable lending against it, which may be why today we’re the second-largest warehouse lender in the country.
Flagstar has supported the broker and correspondent communities for almost 35 years, and we remain committed to them through every change and every evolution of the business.
Lenders and brokers need to take a serious look at who they’re partnered with and how it will enable them to continue growing through these industry changes. Flagstar Bank offers a wide range of solutions to help brokers excel.
