For small- to medium-sized brokers, there are few services a broker network can provide that are more valuable than a good centralized underwriting hub.
Underwriting hubs afford brokers a way to
access lenders that they might not have status with
receive guidance on challenging deals
get better pricing, faster turnaround and better compensation
We spent an afternoon on Invis-Mortgage Intelligence’s deal desk to see if these hubs are really all they’re cracked up to be. Here’s that story.
Invis-MI calls its hub the “Access Desk.” About 15% of the company’s 1,000+ agents use the service, says Scott Musselman, VP Operations. The Access team averages about eight deals per day (2,000 per year), but is especially busy in March through May. “In spring we might as well just sleep here,” says Steve Sadler, who started the Access Desk in 2009.
The concept of the Access Desk was for agents to have status with more lenders, Sadler explains. The desk has top-tier status with 10 lenders, some of which occasionally offer Invis-MI rate and product specials because of the desk’s efficiency. The service has been so popular, he says, that Access Desk volume has grown 20-40% every year since 2009.
“We help a lot of rookies with deals,” says Musselman, but you don’t have to be a rookie to benefit from the service. “We’re also here as a second set of eyes on a deal, even for experienced agents.”
“Some agents simply need a status rate or help structuring a deal,” Sadler adds. “We get to see it all. The quirks of all these deals stick with you so that when someone calls us up, we can say we’ve seen that before.” That experience pays. “We’ve been around a long time and have really good relationships with our lenders’ underwriters.” That often helps Access underwriters better communicate applications to lenders, thus maximizing the chances of approval.
One of the most important benefits of a deal desk is agent support. Invis-MI’s hub underwriters are essentially deal gurus on demand. “Any agent can call us up and ask us where a deal will fit,” Sadler says. Very few broker houses offer that service.
The hub offers benefits to lenders as well, including
Productivity: “We drive efficiency with the lender,” Sadler says, “because we expect a 75% funding ratio from agents on the apps they submit.” And nearly all Invis-MI agents comply. “I haven’t cut anyone off in three years for not meeting funding ratios.”
Staff savings: “We are basically BDMs for the lenders,” and that saves them time and manpower, he adds. “Every week we send an email to brokers with updated rates from the Access Desk, niche products and updates to lender guidelines.”
“When I started, we were knocking on lenders’ doors to get on their lists,” Sadler recalls. “Now the lenders are knocking on our door to get on the Access Desk.”
Despite the required funding ratio, there is no minimum approval ratio. The desk underwriters encourage all bona fide submissions, and since every deal is screened, lender approval ratios are not a concern.
The procedure for submitting a deal is as follows:
The agent sets the rate and inputs an application as usual
The agent then assigns the deal to the Access Desk
The desk gets a notice on D+H Expert that a deal has come in
The underwriter reviews the deal against lender guidelines
If the deal fits the lender, it is submitted for approval
The lender issues the approval, which is forwarded to the agent
The broker presents the approval to the client as usual
Client documents are collected and submitted to the access desk
The desk reviews the documentation and forwards it to the lender.
“We look to ensure that the application fits with the lender. Otherwise, we pick up the phone to learn more about the deal,” Sadler says. “Once the lender gets the deal, it should be an easy approval.”
One question that comes up occasionally is whether hubs reduce lender control over who they deal with. Sadler made it clear that the desk is not a way for banned brokers to access lenders. “If a lender has cut an agent off, they’re not welcome on the desk. We let the lenders know on every submission who the agent is.”
On the topic of cost, it doesn’t cost anything for agents to send in-province deals. Brokers receive full finder’s fees and full volume bonus. The Access Desk is primarily funded by the efficiency bonuses paid by lenders and a nominal fee applied to out-of-province deals. (Mind you, that can amount to a lot of compensation depending on the lender.)
Other broker networks also have successful deal desks, including Mortgage Alliance, Axiom Mortgage, TMG and Mortgage Architects. With competitive pricing and lender access being more important than ever, deal hubs should be a key consideration—especially for smaller agents—when sizing up a new brokerage.
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