REO, mortgage industry veterans form mortgage cooperative to harness collective buying power

Prominent veterans of the real estate and mortgage industries have teamed up to form a mortgage cooperative they say will help member companies “level the playing field” with larger lenders and keep up with regulatory requirements.

The Mortgage Collaborative, based in San Diego, was founded by John Robbins and David Kittle, former chairmen of the Mortgage Bankers Association (MBA); Gary Acosta, CEO of the National Association of Hispanic Real Estate Professionals (NAHREP); and Jim Park, former chair of the Asian Real Estate Association of America (AREAA). Acosta and Park co-founded a San Diego-based REO asset management company, New Vista Asset Management.

The independent, member-owned cooperative will be comprised of mortgage lenders initially, but may incorporate mortgage brokers at some point, a spokesman told Inman News.

The Mortgage Collaborative is designed to help members compete more effectively by using their collective buying power to lower costs for third-party services, such as settlement services and title insurance, and getting better deals when selling loans to an investor in the secondary market, including Fannie Mae and Freddie Mac, or when obtaining warehouse lines, which are lines of credit that mortgage companies use to fund loans at closing and before they receive funds from investors.

“It’s sort of like a credit card for this short-term expense and unless you have millions in cash on hand to fund loans until they are purchased, a warehouse line is essential,” the spokesman said.

“These can also be obtained with better costs if done in bulk. It is akin to a car dealer financing the inventory on the floor … until individual sales are made.”

The Mortgage Collaborative will also help members develop partnerships with a selected group of service providers and mortgage investors, the founders said.

“(The cooperative) enables all mortgage originators to obtain buying power similar to the largest lenders, helping level the playing field and reducing costs for consumers,” Robbins said in a statement.

“We are bringing a fresh new approach to helping these lenders address the opportunities of a market that is evolving rapidly while mitigating the new business and compliance challenges that our industry is facing.”

Park noted that the mortgage industry is transitioning from refinances to purchases, and is therefore faced with significant operational, capital and compliance challenges.

“The Mortgage Collaborative will focus on each of those issues to help our members compete more effectively and position them to succeed in the evolving mortgage market,” Park said in a statement.

“2014 will mark a turning point in the originations business, and our goal is to ensure that the combination of our management team’s collective knowledge of the business, as well as access to innovative products and services, will help our members turn these uncertainties into opportunities for growth.”

The cooperative will announce its founding members later this year and will consider additional members in January 2014.

“There are several thousand mortgage banks, credit unions and depository institutions as well as countless numbers of mortgage originators who can benefit from The Mortgage Collaborative,” Robbins said.

Qualifications for membership are simple and focus on commitment rather than size, the cooperative said.

“We are looking for the ones who are in the business for the long run, committed to expanding its reach into all segments of the market, focused on quality standards and practices, and who desire advantageous relationships with the best services providers,” Robbins said.

In particular, The Mortgage Collaborative plans to help members determine best practices to serve minorities, who the cooperative says are a growing share of the mortgage consumer base and currently make up more than half of the purchase market.

“Collectively, our production volume, business capabilities and access to capital will rival the largest banks, but with members offering locally dedicated, very high-touch service for borrowers,” Robbins said.