Several non-bank home lenders have risen from the ashes of the financial crisis to become some of the biggest players in the nation’s new mortgage banking sector. Here are their stories.
For years, the biggest success story in real estate finance was Angelo R. Mozilo, the son of a butcher who co-founded Countrywide Credit Industries with David S. Loeb in 1969.
Mozilo took Countrywide Home Loans from a startup and turned it into the biggest U.S. mortgage lender — originating $408 billion in 2007 and servicing $1.5 trillion as of mid-2008.
But as the biggest lender at the time of the global financial crisis, Countrywide and Mozilo also became the biggest target for those who saw mortgage bankers as the cause of the biggest recession since the Great Depression. He and the company were sued by investors and the government — severely tarnishing his legacy.
Countrywide was ultimately acquired by Bank of America Corp. — which has been plagued by litigation from the former subprime giant and has paid out billions of dollars in legal expenses as a result.
PennyMac Financial Services Inc.
But from the ashes of Countrywide rose PennyMac.
Former Countrywide Financial Corp.
president and chief operating officer Stanford L. Kurland left the company in 2006 amid a power struggle with Mozilo.
In March 2008 — just months before Bank of America Corp. acquired Countrywide — Kurland founded Private National Mortgage Acceptance Company LLC, more commonly known as PennyMac. BlackRock Inc. and Highfields Capital Management backed Kurland with his startup.
With a robust correspondent lending program,
the Moorpark, California-based company quickly grew its loans originations — closing nearly $50 billion during the first-nine months of 2016. Third-quarter 2016 volume of $21 billion made PennyMac the fifth-biggest U.S. lender during the three-month period.
Headcount at PennyMac has reached nearly 3,000 employees as of Sept. 30, 2016.
Nationstar Mortgage LLC
Nova Credit Corp., founded in 1994, operated as a small subprime lender until 1997, when it was acquired by Centex Corp. The name of the firm was changed to Centex Home Equity Co.
Then, in 2006,
Fortress Investment Group LLC acquired Centex Home Equity from Centex Corp. and renamed it Nationstar.
Had the acquisition not occurred, Nationstar would have likely met
the same fate of the rest of the subprime industry, which disintegrated in 2007, since former parent Centex Corp. was swallowed up by Pulte Homes in 2009 as new home building came to a halt in the midst of the housing crisis.
Under the Fortress umbrella, Dallas-based Nationstar transitioned into a prime mortgage originator and focused on building its mortgage servicing portfolio.
Nationstar closed on an initial public offering in March 2012.
As of the third-quarter 2016, Nationstar serviced $453 billion, making it the fourth-largest U.S. servicer and the largest non-bank servicer.
Headcount at Nationstar was last reported at 7,000 employees as of April 2016.
loanDepot LLC
Back in January 2010, former LendingTree LLC president Anthony Hsieh founded loanDepot.
The Foothill Ranch, California-based organization purchased imortgage Inc. in 2013 and acquired Mortgage Master Inc in January 2015.
loanDepot has grown its staff to more than 5,400 people. It generated mortgage production of $27 billion for the first-nine months of 2016, including $10 billion in the third quarter — making it the ninth-largest mortgage lender.
Quicken Loans Inc.
Quicken Loans
has turned out to be one of the industries biggest success stories. The Detroit-based firm was founded in 1985 by Dan Gilbert — who subsequently sold the company
to Intuit then bought it back in 2002.
Quicken Loans has seen its payroll grow from fewer than 3,000 employees in 2009 to 15,000 as of Sept. 30, 2016. Loan originations, which totaled just $16 billion in 2005, will far exceed $70 billion this year.
In just the third-quarter 2016, Quicken Loans ranked as the
third-biggest U.S. home lender and the largest non-bank mortgage originator with $27 billion in production.
For seven consecutive years, Quicken Loans has been ranked No. 1 in J.D. Power’s U.S. Primary Mortgage Origination Satisfaction Study, while it has topped J.D. Power’s U.S. Primary Mortgage Servicer Satisfaction Study for three consecutive years.
A 2013 report from Standard
& Poor’s Financial Services LLC indicated that Quicken has a requirement that all loans are underwritten twice. S&P also highlighted how the company’s processor role differs significantly from that of other originators.
“Quicken Loans has divided up each individual aspect of the processor’s role to help accelerate the loan review and approval process,” S&P said. “Each file can be touched by as many as 25-30 people who complete a separate component of the process, some of which may be done in parallel.”
During an interview with Mortgage Daily in October 2015, Quicken Loans CEO Bill Emerson explained that culture is at the center of the company’s success.
“It starts with culture,” Emerson said. “It starts with a belief system and integrating that belief system into every new person that comes into the organization.”
Freedom Mortgage Corp.
Another non-bank mortgage banker that has emerged as a significant player in the mortgage market is Freedom Mortgage. It was the seventh-biggest originator during the third-quarter 2016 with $17 billion in production. Staffing exceeds 5,400 employees at the Mount Laurel, New Jersey-based company.
Caliber Home Loans Inc.
With a 35 percent gain from the second quarter in home lending to $13 billion, Caliber Home Loans emerged as the eighth-largest mortgage originator in the third quarter. The Irving, Texas-based subsidiary of Lone Star Funds employed more than 5,700 people as of Sept. 30, 2016.
