A Colorado-based mortgage banker that focuses on loans insured by the Federal Housing Administration has increased its approved brokers, staff and originations -- and is poised to continue growing. The company's chief attributes its success to helping its brokers become FHA approved, paying its originators 100 percent commission and avoiding nonprime products.
Assurity Financial Services LLC has boosted its staff to 521 from 220 in August, and continues to add more employees, Managing Partner Calvin Hamler told MortgageDaily.com. Among the new hires are account executives, independent loan officers and production staff.
"All of our independent loan officers are our employees," he pointed out. "We pay them 100 percent commission."
In addition, the Englewood-based company has reportedly added hundreds of correspondent brokers.
The growth coincides with a rise in originations, which totaled $335 million in 2006 and should reach $505 million this year, he said. In 2008, production is projected to exceed $1 billion.
"So with everything that's happened in the secondary markets and the demise of Alt-A and subprime, the market has really shifted to the FHA lenders and we are the strongest FHA lender in our region," according to Hamler, who owns 50 percent of the company,
In addition to the Colorado location, Assurity also has offices in Tempe, Ariz.; Las Vegas; Bellevue, Wash.; and is opening offices in Illinois, Georgia, Ohio and Oregon, he explained. The company is licensed in a total of 26 states and has license applications pending in other states including Georgia and Virginia.
"We're expanding rapidly," he boasted. "The majority of our growth is coming from our wholesale channel and our independent loan officer channel where our niche is we offer a 100 percent commission payout to our independent loan officers. That's the highest payout in the industry. And we back that with real strong FHA product offerings and a core competency in FHA."
Assurity has been originating FHA-insured mortgages since its founding in January 2002, weathering through during times when government originations weren't so popular, Hamler said -- adding that Assurity never did subprime and has done very little Alt-A.
"Then all this stuff happened that really threw us in the spotlight and the message has been getting out," he stated.
Assurity has a retail call center channel of production, an independent loan officer channel of retail production and a wholesale channel of production, according to Hamler.
"We're aggregating production as a mortgage banker from those three different channels and profitability in one channel can be used to subsidize price in another channel to allow us to gain market share," he explained. "That's allowed us to rapidly expand in the wholesale space at a time when others are shutting down and we're gaining market share rapidly. And we're profitable in wholesale whereas others have gone by the wayside. But we're taking the time to try to gather the right customer base."
But whether wholesale or retail, Assurity is largely an FHA lender, said Hamler, adding, "We feel we do FHA better than anybody else. We've actually trademarked the phrase 'FHA the Assurity Way'."
And while some lenders only do certain types of FHA, Assurity, he said, does them all, including manufactured homes, and has no minimum FICO score for its FHA loans.
Another value-added feature for mortgage brokers is the company's staff of five attorneys, including three compliance professionals, that they help brokers obtain FHA approvals, he explained.
"Not only are we providing support in the business for those who already have FHA approval but we're taking the remaining survivors out there in our client base and saying, 'Hey, you really need to be doing FHA. Let us show you what it takes to get FHA approval'," Hamler said. "So we're really trying to add value to our wholesale clients."
He noted the company will sponsor brokers for FHA approval, as well as educate them and help them develop a quality control program -- a necessity in becoming FHA approved.
"We will actually take their application and go through it with a fine-tooth comb and forward it on to HUD in Washington for them so they can get approval if they don't already have it," Hamler added.
Assurity, which is a Fannie Mae direct seller, has an application pending to become a Ginnie Mae securities issuer, he said. Such a move will enable the company to move from selling FHA loans to investors to securitizing them.
The lender has been building a sophisticated secondary marketing department, explained Hamler, who previously worked on Wall Street as a NASDAQ market maker and a proprietary trader and money manager.
"We're taking advantage of advanced forms of executions in secondary, such as assignments of trade," he said. "We use financial derivatives to hedge our pipelines. We can take advantage of better forms of execution -- mandatory execution, bulk execution, assignment of trades, and so forth. And we use QRM to keep track of our hedge positions and our pipeline and so forth."
Last January, HUD terminated the FHA approval of one of Assurity's branches because of a high number -- 54 -- of early payment defaults. But Hamler pointed out that 52 of those loans were FHA streamlined refinances in which borrowers who were current on their loans refinanced without being re-documented.
That branch's FHA-approval was reportedly reinstated this past summer.
"Neighborhood Watch statistics, looking back two years, show us at 80 percent of the national average default rate," he noted.
"The toxic waste that's on the balance sheets of most mortgage bankers is not something that's giving us any grief because of the type of product we've always originated," he maintained. "Our loan loss reserve is over-funded. And we have redundant access to credit should something happen to one of our warehouse lenders. So we're well capitalized and financially strong.
"We don't have any predefined limit to our growth," Hamler continued. "We're just continuing to finance our production, our growth and our capital base through retained earnings, making sure our operations match production that comes in the door. So as long as we can provide the credit facilities to fund and finance that production we are projecting unlimited growth."
Hamler said the company is positioning itself to compete with the biggest U.S. lenders.
"And we believe we're already in a position to become the biggest retail lender of independent loan officers in the country," he concluded.