Staying the long course for a consistent TPO experience

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Top lender takes a long-term approach with both B2B customers and borrowers

WHEN IT comes to securing mortgage financing, lending approaches can vary. Both the lending philosophy and the mechanism for carrying out loan origination can also look considerably different depending on an individual lender’s designated parameters and criteria. Despite the contrasts in lending practices, one thing has become clear over the last several years. With the overlapping of economic factors directly affecting the lending sphere, including a low-rate environment and skyrocketing property price increases, mortgage purchase financing demand is high, while available inventory remains limited.

At Pennymac TPO, we are deepening our commitment to the wholesale channel and helping our broker and non-delegated correspondent partners on their journey to greatness. We believe the road to greatness is paved with dedicated support, and so we are investing in the people, technology, products, and services to enable our partners to realize and achieve their own growth. As the #1 correspondent aggregator and the #6 wholesale lender, Pennymac is uniquely positioned to be a long-term partner for our clients.

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February 2022 stats for housing starts

Month-over-month increase

“We retain the servicing on the loans that we buy or originate, which is a significant difference from the vast majority of the mortgage originators in the marketplace today”

Michael Quinn, Pennymac

For Pennymac TPO, the answer to navigating through the mortgage financing maze while providing a seamless and reliable experience for its broker and non-delegated client base is to look at the lending long game. Forming solid relationships with its TPO partners while viewing these relationships as long-term, as well as continuing to serve borrowers long after a loan closes, allow Pennymac to stand out from other lenders. “We are broad-based in terms of our production and servicing capabilities. Pennymac stands out as a leader across the B2B continuum, starting with our industry-leading position in delegated correspondent, but [it] also has a strong and growing presence serving brokers and emerging mortgage bankers through our TPO Channel,” says Michael Quinn, managing director, production pricing with Pennymac. Cognizant of the current mortgage climate, which continues to see significant demand for mortgage financing and the ever-constant need for quick processing times, Quinn says that Pennymac also works diligently to create streamlined and consistent working relationships that benefit clients and borrowers.

Staying the lending course long-term To achieve a smooth process, from document submission to closing on a mortgage loan, Pennymac uses the tools and resources at its disposal and implements its long-term view of the loan process with every mortgage file. While it is commonplace for loan originators to sell the servicing of a loan to a third party after closing, Pennymac has always preferred to service the loan itself. This reassures their clients they are in good hands. “We retain all the servicing on the vast majority of the loans that we buy or originate, which is a significant difference from the vast majority of the mortgage originators in the marketplace today,” Quinn explains.

“Pennymac prides itself on being a long-term servicer, so we can maintain that consistency. We think that being a stable home for these loans is a long-term piece of the transaction,” he says. Maintaining client and borrower relationships that last beyond the signing of a loan deal is one piece of the lending puzzle for Pennymac, and can help their TPO partners. The other piece of the puzzle is its management style, which aligns perfectly with its overall company philosophy. “I have been here almost 11 years, and it really is about the long-term for the folks who founded this place and for the people who are in senior management here,” Quinn states. “In this industry, every day presents new challenges and opportunities, but it is the long-term vision and viewpoint of leadership here that is really the most important aspect.”

Providing long-term lending solutions and programs A QM lender by definition, Pennymac provides conventional conforming Fannie and Freddie loans as well as government products. However, 2022 has moved Pennymac in lending directions that enable it to expand into new products and programs for its TPO partners. “We recently released conventional Fannie and Freddie adjustable-rate mortgages [ARMs], as well as recently releasing a Jumbo AUS program,” Quinn says. “Leveraging DU and LP AUS is a significant enhancement to these Jumbo transactions,” he points out. “A full manual underwrite can be quite tedious and laborious for the broker or loan officer to originate. With the automated underwriting process that has greatly benefited the conventional loan programs, we are using that same platform to enhance our Jumbo offering,” Quinn says. Another benefit of AUS, Quinn points out, is that Pennymac will follow DU and LP if borrowers are only required to provide one year’s worth of tax returns.

“We recently released conventional Fannie and Freddie adjustable-rate mortgages [ARMs] as well as recently releasing a Jumbo AUS program”

A look ahead at long-term lending As hot property spots around the country have become out of reach for many buyers, Quinn says that being able to offer flexible Jumbo loan options, made that much more accessible with enhanced automated underwriting options, gives Pennymac a competitive edge. “The Jumbo loan used to be much more of a C-suite sort of loan. Given housing prices and inflation, it really has become a needed product in so many markets in the United States, like the San Francisco Bay Area, South Florida, or New York,” he explains.

“Many of these markets more than likely require a Jumbo loan balance that is above and beyond the Fannie and Freddie loan limit. We are trying to make that [Jumbo loan] process easier for the borrower.” Keeping an eye on the lending trends and the external economic factors that play into the lending process, Quinn is confident that Pennymac is more than prepared to meet the opportunities and challenges head-on. “We want to continue our industry leadership while also being known as the most reliable and ethical company in the business, and at the same time strive to do that every single day – to be a trusted advisor, a trusted partner. And all of our decisions go back to that,” Quinn states.

US housing trends for January 2022

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6.8%

Seasonally adjusted annualized starts

1.769 million

Market forecast for starts

1.69 million

Last year these numbers were this high

2006

Source: US Census Bureau

Decrease in newly listed homes

9.1%

Decrease in national inventory of active listings

28.4%

Decrease in total number of unsold homes

17.9%

National median listing price

$ 375,000

Average days a home is on the market

61 days

Source: Realtor.com January Housing Data Release