Interfirst Mortgage Company was founded in 2001 by Dmitry Godin as a small, retail mortgage broker. The company began to scale operations and by 2008 was primarily a wholesale lender. As the company’s footprint expanded, Interfirst’s originations grew significantly to $4.5 billion in 2011, and a record-setting $14.5 billion in 2012.
In 2017, Interfirst made the decision to exit the market due to increased uncertainty and early warning signs of challenging profitability, including oversaturation and overvaluation in the market.
After two years of enhancing its proprietary loan origination technology platform—and business model to include integrated retail and wholesale offering—Interfirst has relaunched into the residential lending market to provide originations, aggressive pricing, technology deployment, and risk mitigation throughout the lending process.
MReport recently sat down with Mark Freedle, EVP, Production, to get a better understanding of why Interfirst has reentered the mortgage market, especially as the industry is facing challenges.
Why is now the right time to relaunch Interfirst?
Let me start by addressing why we strategically exited the market in 2017. At the beginning of 2013, we began to see a large influx of capital enter the mortgage market, as a significant number of lenders, funds, and private equity groups either entered or reentered. At that time, we also started to see a lack of pricing discipline, an increase of uncertainty and limitations begin to impact the industry including profitability. Our leadership team made a thoughtful and well-planned decision to cease operations in 2017, and in a methodical and orderly manner, we wound down operations without any impact on borrowers, mortgage broker partners, or investors.
We began to rework our business model to include both wholesale and retail origination channels, further improve our technology infrastructure, and recapitalize with plans for a soft relaunch in late 2019.
Market dynamics in early 2020, which have caused significant disruption to the origination and servicing markets, accelerated our plan to reenter the market with our new business model in a more robust way with a broader relaunch of the Company. And today, unlike many other mortgage lenders, we reenter the residential mortgage origination market without any legacy challenges.
Rather than relaunching solely into the wholesale channel, why did Interfirst instead choose an integrated approach?
Building on lessons learned as one of the largest wholesale lenders and utilizing best practice strategies, we are re-launching with an integrated wholesale-retail business model to balance the volatility of the competitive residential lending marketplace. Our technology-based offering positions us for profitability and long-term sustainability.
In addition to resuming our best-in-class wholesale operations, we are launching a new retail channel which includes a technology-enabled call center focused on the origination of low-cost, consumer-direct mortgages. At this time, we are projecting our mix of originations to be 70% wholesale and 30% retail to ensure stability and profitability regardless of market conditions in each sector. We have accelerated the launch of our wholesale offering and will be sharing more information about our branded entry into the retail market in the coming months.
Our new company will have an expanded geographic footprint. We have plans in place to be licensed in all 50 states. This larger geographic presence will allow us to achieve and maintain critical production levels necessary to run a successful wholesale channel, decrease our exposure to regional downturns, and broaden our potential talent pool. Today, we are currently licensed in 13 states including Colorado; Delaware; Florida; Illinois; Louisiana; Michigan; Minnesota; Mississippi; Ohio; Texas; Utah; West Virginia, and Wisconsin.
Although our business model has changed, our aversion to risk and commitment to quality remains the top priority. Our guiding principles have always prioritized avoiding reckless lending practices or the origination of overly risky mortgages. We will continue to pride ourselves on the highest quality origination and servicing of mortgage loans.
The wholesale channel has seen some significant changes over the last few years. How will Interfirst remain competitive?
We agree 100%, we are returning to a different wholesale market, from our perspective, one with a more level playing field. As valuations have normalized, investors are placing a renewed emphasis on the profitability of each loan.
First, our leadership team has experience in the mortgage industry and the vision and discipline to execute across all aspects of the business. We have and will continue to fully support the mortgage brokerage community with a broker-centric approach, and will provide the technology, competitive products/pricing, and service to help mortgage brokers build and grow a successful and sustainable business. We have been hiring seasoned account executives who still see the mortgage industry as a relationship-driven business to work with our mortgage broker partners.
Second, we are building out our wholesale product offerings by recruiting qualified mortgage brokers, many of whom have previously worked with us, from around the country. As I mentioned earlier, ultimately, we will be operating in all 50 states. This nationwide licensure will broaden our potential talent pool. Salespeople with geographically diverse relationships were not previously attracted to us because of an inability to leverage relationships in states where we could not write mortgages. Once we are licensed in all 50 states, we will have the ability to attract the best talent in the industry.
Third, we have the ability to deliver a cost-efficient process driven by our proprietary technology platform that allows mortgage brokers to better serve customers and close more quality loans quickly at the most competitive price. Our objective is to enable our mortgage brokers partners to operate efficiently and friction-free through a technology-driven model based on service, speed, competitive pricing, and sustainability.
We can deliver on these value propositions because our leadership team has significant strength and expertise in secondary marketing, risk management, communication, and a commitment to being a true partner.
Our retail channel features a technology-enhanced call center and a team of experienced loan originators—who have access to advanced technology solutions. They are a non-commissioned sales team that is incentivized to sell the loan that is most advantageous to the customer. We are focused on finding ways to leverage technology to streamline the origination process for consumers and remove any friction and redundancies.
We will be releasing more details about our branded entry to the retail market in the coming months. We are extremely excited about the entering the retail marketplace.
What do you see as the opportunities and challenges for the mortgage industry in 2020, recognizing that the country is in the midst of a national emergency due to COVID-19?
We see the challenges as keeping up with the sheer volume and potentially protracted underwriting/closing time, which could impact the customer experience. We’re ready to handle any challenge, for example, with the underwriting cycle, we’re focused on providing a friction-free experience for the customer. We’re continually innovating our technology to help ease these pains and help our broker partners close more loans as fast and efficiently as possible.
Also, from our perspective, COVID-19 is impacting how quickly we can get fully licensed across the country. The regulators are doing everything they can to work through the backlog of filings, but we still can’t get licenses as soon as we would like.