PERSON OF THE WEEK: The German writer Goethe once observed, ‘In the realm of ideas, everything depends on enthusiasm – in the real world, all rests on perseverance.’ If Goethe worked in today's mortgage banking industry, he might want to reconsider that remark – especially if he came in contact with Denver-based back office fulfillment services provider, Titan Lenders Corp. The company's combination of enthusiasm for mortgage banking and perseverance in the midst of industry tumult has resulted in a successful strategy for growing market share.
MortgageOrb spoke with Titan's president and CEO, Mary Kladde, on the company's recent activities.
Q: Your company has recently created a correspondent lending subsidiary. What do you see as the potentials and the possible challenges in the correspondent space?
Kladde: With the exit of larger banks from the correspondent channel due to Basel III concerns, there was a significant opportunity for a firm of our size to enter the market. Additionally, we already had much of the infrastructure in place due to the nature of the operational service work we already conduct in the market. We chose to debut with a jumbo product because we felt this subset of product had been grossly underserved since the market collapse in 2007. Our industry intelligence also indicated that investor appetite for this product is strong and continues to increase.
The biggest challenge we face – that any company faces in this industry – is market volatility. Expansion into other product lines will depend on many market factors such as interest rate stability and government-sponsored enterprise realignment. We don't know what the future holds with respect to interest rates and when they will begin to rise.
Market contraction also continues to be a real possibility. The refi boom will eventually dry up from interest rates and refi fatigue. When this occurs, the effect on the market will be immediate. Those that focus on purchase business, technology investment, astute attention to regulatory requirements and other long-term strategies will survive.Â
Those that are shortsighted – the ones who are not looking past the end of their nose into tomorrow because they are busy today – will quickly feel the effects of the contractions when they happen. Our market position is to identify and court today's forward thinkers, knowing they will be the survivors of tomorrow.Â
Q: Your company also recently created a risk management services division. What are the goals of this new division, and how does it fit into your overall operations?
Kladde: We view the risk management division as a natural extension of our current business model. Our back-office fulfillment services have given us unparalleled access to a wide variety of operations environments: retail, wholesale, warehouse line lending, correspondent and investor perspective. As a result, we've become a bit like ‘mortgage anthropologists,’ observing the behavior of mortgage bankers in their natural habitat.Â
Titan Risk Management Services is designed to take back-office fulfillment and operational compliance a step further. We can educate companies on how to improve their operations and shore up policies and procedures in the event of a Consumer Financial Protection Bureau (CFPB) audit. To this end, we were fortunate to have recently acquired a number of personnel with strong risk management backgrounds and experience in building out operations and risk management strategies for some very large organizations.
At its heart, Titan is a compliance-oriented operations company. The nature of our back-office fulfillment services requires us to meet CFPB requirements, and we're simply extending our knowledge and expertise out to market.
Q: Your company recently celebrated its fifth anniversary. What have been the highlights of the past five years – and, at the risk of being negative, what have been some of the potholes that you faced?
Kladde: The highlights for us have really been the continued development of our proprietary software platforms. The functionality and versatility we built into our systems since its inception has enabled us to deftly expand into a variety of mortgage arenas as needed.Â
For example, Titan's Whole Loan Purchase Review program, maintained within our Cerberyx application, was built to meet the needs of Massachusetts Housing Finance Authority in an extraordinarily short timeframe. Additionally, when the Office of the Comptroller of the Currency came out with its data reconciliation and quality assurance regulations for MERSCORP servicing and sub-servicing members, we were able to rapidly deploy MinTrak to market with very little development time. This speed to market is entirely a result of the malleability of our software platforms.
As far as potholes, there's really only been one, which was the timing of the company's founding. We were officially open for business on July 2, 2007 – not the greatest time to launch a mortgage related business. After some initial fretting however, it did work to our advantage. Our entire business proposition is based on services that provide compliance and operational soundness.Â
Q: Can you offer any previews of new ventures and pursuits for Titan in 2013?
Kladde: Titan will continue to focus our growth initiatives in the areas of risk management services and providing a market avenue for lenders looking to participate in the jumbo space. I expect that the rapid pace of regulatory changes will also provide new opportunities for market expansion. We also look to continue providing technology solutions that will perpetuate the movement toward data integrity, standardization of process, and transparency.
Q: What do you forecast for the mortgage banking industry in 2013?
Kladde: Obviously, there's going to be more regulation on the horizon. For better or worse, the election solidified the regulatory environment for 2013.Â