How Mortgage Lenders Can Quickly and Profitably Expand Into New Products

Residential mortgage originators continue to expand into new products amid tight housing inventory and higher interest rates -- a trend that brings both opportunity and risk. Jon Gerretsen, Managing Director, New Originations and Fulfillment Services, recently spoke with Sarah Wheeler, HousingWire's Editor in Chief, about how SitusAMC helps lenders remain flexible, mitigate risk and increase team efficiency as they navigate new markets.  

“In the last 18 months, there's been significant increase in second-mortgage type products, home equity lines of credit, closed-end seconds, debt service coverage ratio (DSCR) loans, fix and flips,” Gerretsen said on the Housing Wire Daily podcast. “Those used to be a relatively small percentage of the marketplace.” 

Those strategic pivots come with underwriting, regulatory, reputational and operational risks. Originators may invest the time, capital and people to build up the resources needed to lend in those areas – only to find they must dismantle everything if they market shifts. These risks can be addressed by tapping into flexible, deeply experienced teams, Gerretsen said. 

“Our folks have 10+ years in the business, so they become part of the client’s team on a specific product, and bring that knowledge,” he said. “It really involves best practices. If a lender may not necessarily have originated second mortgages or business-purpose type loans, we help them get to market a lot quicker.” 

In addition, SitusAMC’s professionals bring insights about trends and risks from their peers in the secondary market, where the firm has been a leader in third-party due diligence.  

“We're handling thousands of mortgage files and production on a daily, weekly and monthly basis,” Gerretsen noted. “We're in tune with the marketplace and what's going on with products on the back end, evaluating and grading product. We bring that value-add from the post-closing side into the origination space, to help streamline and improve the end product.” 

Partnering with a third-party firm gives originators more bandwidth to focus on customer relationships, a key differentiator in a competitive market.  

“A processor can typically handle 25 to 30 borrower files at one time, because they're clearing conditions, ordering appraisals, sending out disclosures,” Gerretsen explained. “If we do all those types of activities for them, it allows that individual to focus all their attention on the client. If that borrower is shopping around with other companies, it's all about response time and service level. So whether it's text, email, a phone call, their response time improves dramatically." 

Meanwhile, interest rates could remain volatile amid mixed economic signals and geopolitical uncertainty. Lenders need to prepare for the possibility of renewed activity if rates dip, given pent-up demand. SitusAMC serves as a backup “insurance policy” to handle spikes, Gerretsen said. Lenders can prepare by partnering in advance with a firm like SitusAMC.  

“If a spike took place, like we saw in September 2024, my turn times to my borrowers, brokers and correspondents doesn't go from one or two days to 10 days,” Gerretsen explained. “It stays at one or two days, because now I have this vendor partner that contractually provides service-level agreements to me and to my borrowers. It puts a guarantee around service and quality when markets are volatile.” 

The word “outsourcing” doesn’t truly capture the benefits of the model, Gerretsen said. 

 “It's a partnership,” he explained. “We truly become an extension of the client's team, a dedicated team following their same business model on the front end, so it's really part of their go-to-market (strategy). We bring best practices to help them navigate in markets they may not be unfamiliar with, or help them become more scalable in markets where they already have a presence.” 

Listen to the full podcast here: https://www.housingwire.com/podcast/jon-gerretsen-on-reducing-risks-in-loan-manufacturing/. For more information on SitusAMC’s loan origination and fulfillment services, visit our website.