The specific needs of correspondent lending divisions often get overlooked  in the development of mortgage technology solutions. Texas Capital Bank is looking to change that formula with a new correspondent line and platform to forge stronger ties between correspondent sellers and investors in the process.

HousingWire: You’re launching a new correspondent line of business. What makes this a smart move?

Jack Nunnery: Both the mortgage origination and aggregation markets continue to demonstrate a level of fragmentation that should appeal to new entrants if they can afford the cost of entry. We are confident that a new entrant with more than adequate net worth and liquidity coupled with a technology solution that focuses solely on the aggregation space will be successful  

Current technology solutions are designed to fulfill across retail, wholesale and correspondent business channels. Typically, correspondent functionality is limited because most loan origination systems spend a majority of their development efforts meeting the business requirements for retail and wholesale but fall short in addressing correspondent aggregation. There is a need for a single threaded solution that optimizes the interaction between correspondent sellers and investors.   

The absence of a true partnership between many sellers and investors makes the opportunity even more compelling.  The investor that does a cursory review of the loan file at the time of purchase is doing the originator no favors.  Essentially, the message is they are going to spend less money and effort reviewing the loan knowing the correspondent’s balance sheet serves as the principal risk mitigant for missing critical or moderate defects on a loan.  If that aggregator has to repurchase the loan their strategy will be to push recourse back to the originator. The best time to identify defects is early in the loan’s life cycle when the probability of being able to cure is greatest.  The objective is to identify and cure defects without compromising cycle time and the benefit is to stop kicking the can down the road with regard to repurchases.

The origination and aggregation sectors need innovative solutions that address the ongoing challenges of data integrity, cycle time, transparency and profitability.  Transformation is imperative for long term sustainability and most importantly, mortgage bankers should be in the role of driving change, not relying on regulators to impose change.

HW: What will differentiate your Correspondent Hub platform from others already in the market?

JN: At the core of the offering is a compelling combination of technology designed solely for correspondent aggregation supported by a process architecture which applies a manufacturing sector approach to financial services. We recognize the importance of ease of use, transparency and rapid cycle times while deploying a methodology that identifies critical and moderate defects so they can be quickly cured. Then we pass back to our partners’ precise business intelligence enabling them to enhance their processes to minimize the recurrence of future defects.

We were fortunate to be able work with LoanLogics to design the solution in a true greenfield environment. There were no legacy processes and technology to influence the build nor did our solution have to fulfill across different origination channels with divergent business requirements. We knew people would be a critical component to our success and we found seasoned mortgage professionals that wanted to be part of a unique build experience.

What our partners can expect from Texas Capital Bank is a client centric ecosystem driven by fresh technology that enables open communication, fast turn times and identification and resolution of defects that left unresolved could result in the potential repurchase or indemnification of the loan. At the essence of a healthy partnership is the concept that both partners benefit from the relationship.

HW: What kind of response do you anticipate?

JN: We are confident that mortgage bankers will react positively to our value proposition. Many people sell partnership but deliver something else, we intend to make good on our commitment. A successful partnership must place a premium on the preservation of our partner’s capital and liquidity while assisting them in the transformation of their business processes to better navigate an environment that is significantly impacted by regulation.

Our Warehouse Lending offering has created a very positive national reputation and we want to extend our footprint in the market.  That reputation was built on great technology, excellent service and a knowledgeable fulfillment team that recognizes the value of customer service. Texas Capital Bank will bring those same fundamental principles to Correspondent Lending. 

HW: What made you want to partner with LoanLogics? 

JN: The partnership provided a great opportunity to collaborate for the creation of an end to end loan aggregation solution with a partner who shared a similar vision and roadmap. In an environment that requires intense scrutiny of our vendor partners, leveraging a robust and comprehensive technology solution minimized the number of vendors and simplified our work effort. Capabilities include document management, web portal, PPE, and underwriting/audit/purchase review. This offering from LoanLogics allowed Texas Capital Bank to decouple sequential processes, enabling rapid cycle time while ensuring process consistency on a single platform solution. In support of our Correspondent partners, granular data and analysis of audit history can enable them to improve their business model and better manage risk. 

Texas Capital Bank had the opportunity to meet with many providers in the industry, and while there are numerous exciting products out there, we came away with a valuable partner. Having been in the industry for 32 years, I know how very rare it is to have such a connection.

HW: What’s next for Texas Capital Bank?

JN: The mortgage industry has represented a core business for Texas Capital Bank for over a decade. We started as a warehouse lender and have added MSR Lending and Treasury Services to the offering. As a product of that journey, many valuable and long term partnerships have been created as a result of our commitment to mortgage banking. We thank our partners for our success and hope that we have contributed to their success as well. Correspondent Lending represents another significant expansion of our footprint. We will continue to listen to the voice of the client and look for opportunities to build on our offering.