CMG Financial on the Future of the Industry
In this special edition of our Roundtable series, we interviewed three top executives with one of our President’s Council sponsors, CMG Financial, a top residential mortgage lender based in San Ramon. The future of the industry will be determined by how innovative companies like CMG Financial respond to new regulatory realities, market disruptions, and more.
We spoke with AJ George, SVP, Correspondent Lending; Adam Millstein, SVP, National Wholesale Lending; and Charlie Rogers, SVP, Retail Lending.
California MBA: How has CMG adapted to the new regulatory reality of TRID?
George:Just like any new regulation that has been implemented over the past 5-6 years, CMG is no stranger to seeing change in the market place, in fact, we see this as an opportunity to make something that is commonly looked at as a negative thing, looked at as a positive thing. Acknowledging that change is consistent in our business has truly allowed CMG to stay ahead of the curve with training materials, understanding, and preparedness for TRID with our staff as well as our customers.
Millstein:Well, like most lenders, transitioning into the new TRID world had some bumps, but it wasn’t as difficult as we anticipated. I think the main reason for that was the intense training we did the 3 months leading up to implementation. We focused not only on training our employee’s, but also our customers and their referral partners. We also made learning the new rules fun by having daily TRID trivia contests which got our employee’s really engaged in the process. Now that we are 6 months post implementation, we have made some process and system updates along the way, but for the most part, TRID has become our new norm.
Rogers:In speaking with friends at other lenders, as well as speaking from our own experience, TRID implementation was a challenge. While we had a solid, well thought out implementation plan, we didn’t understand the impact the new process would have on our closing department’s staffing levels. November and December were challenging as not only were we working through the new process flows and regulatory requirements, but our title company partners were as well. Today we feel very good about our process flows, which we tweaked from our original plans, and our staffing levels are proportionate to the work load. As a result, our closing turn times are close to where they were pre TRID. I believe one of the most important lessons learned was that communication and attitude are critical to any change process. We built a daily reporting, and for a period, daily call process, that gave our business partners, originators, and title partners a clear picture of what was needed to complete the process. This gave them confidence that we were on top of their loans, and that nothing had fallen through the cracks. Our support staff has been amazing, and all can see that their hard work and determination has paid off.
California MBA: What does the future look like for non-QM lending?
Millstein:Good question. We are starting to see more and more non-QM product options being introduced, but the volume being originated on these products continues to be minimal. The biggest barrier seems to be price simply because there isn’t a robust secondary market for these products currently. Until that happens, we see these products being more of an ancillary or niche product so we
will continue to focus on agency products and how to innovate our fulfillment process to grow our wholesale and non-delegated production.
Rogers:In short, uncertain. The regulations and legal exposure have limited the market for non QM loans, both in terms of products, and lenders that are willing to originate them. Perhaps over time the legal concerns will be less of a concern, and there will be more of a market for Non QM product.
George:The future of Non QM market really all depends on liquidity in the market place for that type of product, this can range all the way from a securitization market, to regulation, and a legal liability appetite investors have. I really hope that the future for Non QM lending is bright as it does allow for more competition in the market place. For now, Correspondent Lending at CMG will continue to remain an aggressive take out on Agency business and take advantage of Non QM options as we see fit.
California MBA: What is the company doing to attract Millennials and Gen X borrower?
Rogers:At CMG, we have placed significant resources behind developing social media and mobile solution strategies. We are focused on attracting Gen X and Millennial borrowers by marketing to them the way they prefer to shop, which is online, specifically on line word of mouth, and communicate with them through mobile applications. We have found that through our marketing efforts, we are able to attract potential borrowers who are looking to purchase their first home early in their buying process. Many have not located a Realtor to work with, and we are able to provide them with a selection of qualified Realtors to choose from. The Realtors we refer are not only knowledgeable about their market, but also understand how to work with younger buyers, and how the internet is the centerpiece of the buying process. We are committed to adjusting our strategies as technology changes, and as Millennials do their research and buying habits change.
George:Well, being a Millennial myself and being located in the heart of the Bay Area, we have a pretty good pulse as to what Millennials interests are, especially when purchasing a home. As we know, Millennials are smart, resourceful, and most of all…cheap. In order to attract them/us the process needs to be something that they identify with which is not how mortgages are done traditionally today. We are doing several things over here at CMG to ensure that we are creating a process that is identifiable with this generation.
For more information about CMG Financial, go to www.cmgfi.com or call the San Ramon offices at (925) 983-3000.