Donnie Kirby, former vice president of national direct-to-consumer sales Wyndham Capital MortgageSpent more than 12 years at the Charlotte, North Carolina-based company before starting the mortgage broker shop cornerstone home loan,
Thank you for reading this post, don't forget to subscribe!At Wyndham, Kirby led the expansion of the lender’s branches from Charlotte, North Carolina to Arizona, Texas, Utah and Missouri. When mortgage rates rose and demand for low-cost mortgages increased, Kirby saw opportunities in the wholesale lending channel.
“Nothing is easier in the mortgage industry right now (…) With the broker model, you have so many outlets to send these loans that it’s really easy for most borrowers to find a home. We all know that home Affordability is an issue for everybody right now. Having those extra layers in the retail model really creates tension there, Kirby said in an interview.
Technological advancements in the broker space, reaching the level of retail lenders, was another factor that helped them make the transition.
“I think if you look back a few years, the broker space was lacking from a technology perspective, but that’s really where retail (…) has gotten to. Loan origination,” Kirby said. system, the point of sale system, I think the most advanced is the actual exchange of information between the broker and the wholesale lender.
As a new wholesale lender, Cornerstone Home Loans faces the challenge of building new referral partners and getting the company licensed in other states. Kirby expects to produce a total of 15 LOs and about $50 million by the end of the year.
Read about Kirby’s opportunities in wholesale lending, the challenges he faces starting a new mortgage brokerage shop, and how he plans to grow his business.
This interview has been condensed and lightly edited for clarity.
Connie Kim: You’ve been at Wyndham Capital Mortgage a long time since 2011. Why did you decide to start your own mortgage broker shop after spending most of your career at a direct-to-consumer lending shop?
Donnie Kirby: I’ve been in the mortgage industry for about 14 years, and as you mentioned, the last 12 have been with Wyndham. I developed a lot of good relationships there during that time. Over the past few years, most of my focus was on the growth and expansion of the company. We went from having just one center (branch) in Charlotte, North Carolina to building four different locations across the US.
Going through that experience really gave me the confidence that I could do this on my own. I’ve always had a bit of an entrepreneurial spirit in me. So opening a brokerage was always on my mind. I felt like if I was ever going to do this, now was the time to branch out and do my bit. So it was really a combination of what I focused on over the last couple of years, and then the direction of that company that led me to decide that now is the time.
Kim: I’ve heard of retail LOs transitioning to the wholesale side, citing fewer layers of bureaucracy compared to retail lenders and pricing advantages. What is the advantage of starting a mortgage broker shop?
Kirby: Nothing is easy in the mortgage industry right now. My approach is that you have to have companies that are willing to open up that credit risk profile to help your loan officers bring in volume. Not just open it up, but really excel with that customers and those particular types of products.
One of the challenges you’ll face in retail is that you really get caught up in your company’s appetite from a credit risk perspective at any given time. But with the broker model, you have so many outlets to send these loans that it’s really easy for most borrowers to find a home.
In a market where every loan counts, this is a great resource for loan officers to have those outlets. I also think the retail model is going to be really challenging on the pricing side. We all know that home affordability is an issue for everyone right now. Having those extra layers in the retail model really creates tension there.
Not only will your loan officer want to be compensated, but so will their sales managers and regional managers, and VPs, etc. So it just creates a challenge that I think the broker model solves. We don’t have all those extra layers, and you’re able to be much more competitive in a market where affordability is of the utmost importance.
Kim: What has changed in the mortgage broker space that has made it easier for retail LOs to enter the wholesale channel?
Kirby: I think if you look back a few years, the broker space was lacking from a technology perspective, but that’s really where retail has gotten to. Loan origination systems, point-of-sale systems, I think the most advanced is the actual exchange of information between the broker and the wholesale lender.
This used to be a very cumbersome process with most companies, and many of them have created tech-forward portals that make the process of sharing that information incredibly easy – and it only improves the customer experience. .
Kim, What are some of the challenges of starting a mortgage broker shop, especially when the industry is going strong and rates are higher than in the pandemic years?
Kirby: When you’re a startup and your processes aren’t completely smooth sailing, I think referral partners will be hesitant. If you’re only closing one or two loans a month, they want the customer experience to be right.
Whenever you are new and transitioning from retail to broker model, you are learning some of them. You’ll do everything you can to avoid those hiccups, but in a startup, it’s going to happen. So I think some of the referral partners aren’t necessarily hesitant, but really want to make sure that process is dialed in, and that their consumer doesn’t have a bad experience.
Beyond those things, I think compliance is a challenge for everyone in our business at this point in time. Most of us who come from the sales or origination side, we don’t have a lot of experience in terms of compliance.
By starting your own brokerage, you are dealing with individual states to obtain a company license. There aren’t a lot of blueprints for exactly what needs to be done, so you hire consultants to help you navigate that process.
So those are the two things that I would say have been the most challenging for me so far.
Kim: Cornerstone Home Loans was approved for business in South Carolina and North Carolina this week. How big is the company?
Kirby: Our first licenses were actually approved on Monday; That was North and South Carolina. So it’s currently just two. My brother is one of the top productive loan officers in our area. I certainly expect some more of the region’s top producers to come through in the coming months as they wind down their pipelines and position themselves to make changes.
We want to grow sustainably throughout 2023. It’s really about laying the foundation, so that as we go forward, we can have a long and prosperous run. I expect that by the end of the year we will have about 15 productive LOs, a really big jump into 2024.
Kim: Are new hires coming through your network? How are you recruiting the new LO?
Kirby: Yes, most of the talent will come from my network. Some I have worked with before, some I have never worked with. But I think as you mentioned earlier, LOs are looking at their current environment and saying, ‘I think this wholesale and broker opportunity might be a better channel for me, given some of the challenges. is happening, which we are facing. Retail side now.’
Kim: Are you planning to expand Cornerstone Home Loan license to other states?
Kirby: Yeah, so we’re currently in process with five other states, geographically concentrated in the Southeast and the Atlantic. We’ll add five more in the next quarter, and then add more strategically based on opportunities.
At my previous company, we were licensed in 48 states, and some of the talent that we would recruit, some of the states they wanted to have the ability to originate from.
Kim: I hear about lack of inventory issues and bidding wars across the country. How is the housing market in South Carolina and North Carolina?
Kirby: So here in Charlotte, we hang out on the North and South Carolina border. I think we’re definitely seeing that here in our local market – really low inventory,[and]any desired home that hits the market, buyers definitely get into a bidding war. The last data I saw on the local market in February was that prices were up 14% year-on-year.
Where we are seeing some success is outside metro areas. The realtor partners we have seem to have been pretty consistent even through these more challenging times. I think the price is a little low, there’s a little more inventory.
So we’re seeing them remain pretty consistent, but in the Charlotte inner metro, it’s been really challenging. There’s not a lot of inventory, and some of the same things you’re hearing from some of the other big metros.
Kim: Do you see more opportunities? Charlotte because it is a highly sought after market, or do you want to target business in outer metros?
Kirby: Charlotte is a hot market, so although we see more consistent business in those areas, I think we’ve historically underserved that market. So from a growth perspective, we are identifying our growth opportunities in the outer metros.
We’re saying let’s go out and have some conversations with some of the potential partners that operate in those areas, some of the builders that are doing development. we’re trying to target [the outer metros] As a new opportunity and to continue to generate consistent business.
Kim: You mentioned 2024 is when you expect business to pick up. What is your production target for this year?
Kirby: Given that we won’t actually start funding volumes until April and most likely May, I think if we get to $50 million this year, I’ll consider it a win.
It’s more about the foundation and the technology to scale up in 2024 — and really toward the end of this year as some of those individuals come on board.
Kim: With the industry still right-sizing and high rate levels, what kind of opportunities do you see this year?
Kirby: My honest opinion is, I think there’s still opportunities in this market. I mentioned my brother’s arrival; They raised $5 million in funding last month and in March. I still see top performers across the industry put in amazing production months.
I think the key to finding success is coming in and working out every day. I don’t think there’s any mystery anymore. There is no recipe; You have to provide more value to your referral partners, you have to make more calls than our peers, you have to spend more time building your brand on social media and in your communities.
When rates go up, there really are no shortcuts. I see a lot of loan officers out there who are proactive and engaged and intentional every day.
