In the latest broker letter from Countrywide attempts are made to reduce anxiety building in the broker community about the onslaught of bank closures and strategic changes away from the wholesale and correspondent lending models. Clearly with WaMu shuttering correspondent lending, and lots of chatter about the need to improve quality by focusing solely on retail origination, brokers are rightfully worried about their place in the industry when all is said and done.
From Countrywide:
Dear Business Partner:
As we continue to adapt to challenges in the mortgage market, this communication is the second of a series from Countrywide, America’s Wholesale Lender. In these ongoing communications, my goal is to present open and direct assessments of the current state of wholesale lending, and the measures we can take collectively as originators and lenders to successfully evolve the wholesale lending channel.
My first communication in this series, emailed to you on August 28, was met with a wide range of reactions from the broker community as expected. I’m pleased that so many people took the time to share their views as it demonstrates how engaged and passionate we all are about this business. Truly productive communication should inspire dialog that airs points of agreement as well as honest differences of opinions.
Undoubtedly, these communications are about looking forward and about helping to define what success will look like for all of us tomorrow and in the future. To flourish, all players in the wholesale lending channel lenders and brokers alike must work together to evolve and prosper in today’s ever-changing environment. As a former loan originator who once operated as a mortgage broker, I couldn’t believe more in the vital role that strong, high-quality, and service-oriented mortgage brokers play in the mortgage lending process.
Adapting for Change
In this virtually unprecedented period in our industry, it is clear that we must all take decisive action to ensure the long-term health of our business and of the wholesale lending channel. Given the current soft housing market conditions and the tighter credit standards that are in place today, we already know that 2007 will produce lower origination volumes than expected. We are now estimating that these variables will reduce the size of the originations market in 2008 by 25% or more from 2007 volumes. In addition to these forecasts, Countrywide is now only offering non-prime financing options that are eligible for sale or securitization under programs supported by the GSEs (Fannie Mae, Freddie Mac) and FHA.
Despite these and other reductions to our product guidelines, Countrywide, America’s Wholesale Lender continues to offer among the broadest product menus in the industry. Nevertheless, we must evolve our business model to adapt to these significant changes in the market.
Accordingly, we recently announced our plans to integrate our prime and non-prime sales forces into a single, industry-leading sales organization dedicated to supporting our extensive product line including Non-Prime, Government, Custom Construction, and Reverse Mortgage*. This evolution of our organization truly strengthens our commitment to our One Source lending strategy and provides you easier access to the home loan solutions that can help drive your business.
As a result of this integration, we made a difficult decision and, earlier today, reduced the size of our sales organization across the country. It was necessary to make these adjustments to ensure appropriate broker account assignments in light of the projected lower size of the overall mortgage market.
Your One Source for Success.SM
In spite of these actions, Countrywide, America’s Wholesale Lender is well positioned to continue its leadership role in the channel and remains relentless in our pursuit of achieving a dominant status among wholesale lenders.
Our new sales force and structure is designed to better meet the needs of our Business Partners as we work together to evolve and strengthen the wholesale lending channel. Our distributed Account Representatives and fulfillment resources are truly devoted to helping you drive your success with one simple goal in mind delivering responsive and knowledgeable service each and every time you call upon them for assistance.
As a result of today’s changes, we are quickly working to restructure our account assignments across our existing sales force. If you have any questions regarding this process, please contact your Account Representative or the Area Sales Manager in your market. You may visit www.cwbc.com or call 1-800-877-POWER if you need assistance with contact information.
Looking to the Future
At Countrywide, America’s Wholesale Lender, we remain steadfast in our commitment to our broker Business Partners and our goal of providing solutions that can help drive your business. Working together, I am confident that we can successfully evolve the wholesale lending channel to adapt and prosper in the new market paradigm. To do so, however, we must all be willing to constantly examine our business strategies and practices and to affect change where change is needed.
In my next communication, I plan to address the ongoing importance of the mortgage broker “value proposition” in today’s mortgage lending environment. I also plan to share observations on the topics of strengthening consumer loyalty and enhancing the broker role as a trusted advisor in the housing finance industry.
Together as originators and lenders we can and will revitalize the wholesale lending industry. Thank you once again for your time.
Todd A. Dal Porto
Senior Managing Director & President
Countrywide, America’s Wholesale Lender
My thoughts? Well in the last communication there was quite an uproar from the broker community from what appeared (not to this recipient however) that Countrywide was looking for a way to ease the news that less production would be coming from the wholesale (broker) channel in the future. While not implicit, the first message seemed to raise that concern among brokers.
This is clearly an attempt to show that Countrywide is not running for the wholesale aisle - yet. However, it must be in context with the layoff scheme to reduce the workforce by 20%. Will they be concentrated in wholesale or evenly between all origination channels? From early accounts it seems they are taking their most drastic steps in reducing wholesale capacity. However, this is just my opinion and we have yet to see the final strategy revealed from Countrywide.
I will say though that they are at the mercy of the secondary market like everyone else. If investors only want retail loans, retail loans is what they’ll get - regardless of what Countrywide may or may not say now.
Personally I’ve seen staff layoffs, account reassignments and more that make it look like a paring down of wholesale is well underway - but I could be wrong.
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[Source: Blown Mortgage]
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