“Our expansion comes at an exciting time within mortgage banking,” said Pavan Agarwal, chief executive officer of Sun West, in a statement. “Sun West recognized that consumers and realtors were being underserved due to the financial market correction. We made a commitment to use our 30 years of experience and knowledge to write loans that consumers actually need and can afford.”

The company, which is a full service FHA, VA, Freddie Mac, Fannie Mae, Ginnie Mae, and reverse mortgage banker, hired Joseph Sullivan (formerly of Sullivan Financial Services and Somerset Hills Bancorp) as its east coast regional vice president.

“Our eastern operation has enjoyed unparalleled success and has quickly acquired many top notch mortgage professionals,” said Sullivan.

The new branch currently has 15 employees with another 14 sales associates in the process of training. Sun West’s employees go through a comprehensive training program that enables them to originate both forward and reverse loans, a spokesman from the company told RMD.

While a majority of these originators will be working out of the New Jersey office, there are also satellite offices opening simultaneously in New Hampshire, Vermont, and Connecticut.

Earlier this year, Sun West launched a retail division in addition to its wholesale line and announced its plans for gradual expansion.

Sun West’s endorsement volume has increased from 40 endorsements in 2010 to 242 through September, earning the company a top-25 ranking in terms of volume, according to data from Reverse Market Insight.

Written by Alyssa Gerace

Bergh, who has been in the reverse mortgage business for 15 years, has begun to recruit aggressively and has a team of retail loan officers on board to help build the business.

“We will grow nationally,” said Bergh, “probably one state at a time.”

That growth plan is to be slow and controlled, the company said, where the right opportunities exist. Within 12 to 18 months, Sun West hopes the retail side will be around 30% of its business overall.

With its large network of wholesale lenders and retail market share recently abandoned by Financial Freedom and Bank of America, Sun West is positioned to gain, said Bergh. “The market is changing and is ready to grow.”

Additionally, the company sees an opportunity in that some brokers looking to join a retail team are already familiar with Sun West on the reverse side, having delivered loans to the company in the past. Sun West’s $6 billion servicing business is also seen as a potential growth vehicle.

Sun West is the second major lender to introduce a retail channel recently; Reverse Mortgage Solutions (RMS) launched a retail call center and correspondent channel in March.

Written by Elizabeth Ecker

Editors note: A previous version of this article said Sun West was based in San Diego.

RMI has tracked the declining number of originators in the industry for some time, but the TPO originations by non-FHA approved originators (working through an approved sponsor) have the potential to offset that trend, RMI says, showing “dramatic” growth in March. (See a RMI’s chart tracking TPO performance.)

For wholesale leaders, four of the top 10 lenders saw 12-month highs in March as the industry set its own high water mark, RMI reports. Of those lenders, Wells Fargo was responsible for 31.9% of all loans through retail and wholesale channels, which is above the lender’s 12-month share average of 26.4%. Other lenders noted by RMI were Generation, nearing 10% of market share; One Reverse, which has been growing its direct lending business and shows 5% market share; and Sun West, which is back in the top 10 for the first time since November.

RMI notes that non-FHA approved TPO originators cannot yet be tracked individually, but expects the data will be available within a few months.

View the Reverse Market Insight report.

Written by Elizabeth Ecker

Earlier this month, Ginnie Mae eliminated the flat-fee option for servicing HECM mortgage-backed securities (HMBS) program and provided issuers more flexibility starting July 1st, 2011. Under the new guidelines, issuers can select an increased servicing margin of up to 150 basis points.

Using ReverseSoft, issuers have the ability to track, account, and report to Ginnie Mae and end investors’ varying servicing fees on reparticipations of a single loan said SunWest. Due to changing market conditions, the reparticipation may need to be issued at a different servicing margin than that at which the loans were initially securitized.

“We are excited about the unique value we bring to our partners through ReverseSoft,” said Pavan Agarwal, CEO of Sun West Mortgage Company. “The ability to use technology to leverage earnings has been the cornerstone of our philosophy, and we invite partners to capitalize on our investments.”

Sun West is currently licensed in more than 47 states, is an FHA, VA, USDA, Freddie Mac, Fannie Mae and Ginnie Mae approved full-service mortgage banker.

The purpose of the administrative stay is to provide the court sufficient opportunity to consider the merits of the motions for emergency relief.  Whether or not the stay will end up doing anything more than delaying the changes isn’t clear.

“The fact that this stay was granted is an indication that the judges believe there is something here to warrant the decision of the lower court to be reversed. It’s not a guarantee, but they don’t always do this,” said Marc Savitt, president of the National Association of Independent Housing Professionals (NAIHP) during an interview with RMD last week.

As a result of the stay, wholesale lenders that offer reverse mortgages are scrambling to accommodate brokers who want to submit files under the old compensation plans.  For many, this means they have to roll back loan origination software updates that went live before the expected April 1 implementation date.

Genworth Home Equity Access announced it was extending the deadline to submit applications under the current compensation structure to Monday April 4th and Reverseit told brokers it would accept applications already taken under the old compensation guidelines. Sun West and MetLife Home Loans said they’re allowing brokers to continue submitting loans under the old compensation structure as well.

Early this week, things could change.  The government is directed to file a combined response to both motions by 12:00 noon, Monday, April 4, 2011, not to exceed 20 pages. The industry groups (National Association of Mortgage Brokers and the National Association of Independent Housing Professionals) then may file a joint reply to the government’s response by 10:00 a.m., Tuesday, April 5, 2011, not to exceed 10 pages.

View the court documents here.

“We are not trying to bring a lot of new players into the market,” said John Nixon of Bank of America during the a session on new third party originators at the National Reverse Mortgage Lenders Association Conference in New Orleans.

According to Nixon, BofA’s current third party originator approval process is already rigorous but it will specifically look for prior experience with reverse mortgages when approving new brokers to sponsor.

Without specific guidelines from HUD, mortgagees are responsible for sponsoring brokers (third party originators) and setting any minimum requirements necessary to do business.  For the most part, panelists said net worth requirements will remain at previous levels but all agreed it’s not a huge factor in determining who they sponsor since it’s not enough to repurchase a bad loan.  Instead, they’re paying close attention to the credit history of company principals and compliance checks to ensure brokers are operating correctly.

“We need to intensify what we’re currently looking act,” said Kimberly Kerrigan, VP of Generation Mortgage.  Specifically, the company plans to conduct quality control audits, extensive reviews of files submitted, and may require some type of errors and omissions coverage for third party originators.  As far as official guidelines for correspondents currently approved with Generation, “we are getting ready to roll out the procedures for current brokers in the next couple weeks,” she said.

Others wholesale lenders like Urban Financial are already approving new TPOs and pulled its first case number earlier this week. “In the last 30 days, we received at least 40 applications from loan officers who left companies that originated reverse mortgages,” said Sandy Tennekoon, Operations Manager at Urban Financial Group/Reverse It.  “They’re joining companies who were not previously approved with FHA.”

Reverseit plans to keep the approval process the same as before and will do onsite visits, run credit and MARI reports and require financials from third party originators.

Pete Engelken, President of Genworth Financial Home Equity Access said the company will start to take new TPO applications later this month but added that much will change in how it approves brokers. “We’ve added some additional features to make sure we’re comfortable with the loans.”

Genworth will not require financial statements but brokers must comply with state licensing requirements and agree in writing to NRMLA’s ethical lending and advertising guidelines.  To help make sure marketing materials are compliant, Engelken said it will offer brokers “consumer facing advertisements that are high quality and non-branded.”

The only panelist already closing business with new TPOs was Sun West Mortgage Company.  “Our experience is that these brokers pick up an occasional loan through a referral,” said Pavan Agarwal, executive VP at Sun West in an email to RMD.  The company has seen a lot of interest from its “forward” wholesale clients but whether or not it will be a big part of their business isn’t clear.  “It’s a very new channel and only time will tell,” he said.

“We’re very pleased to partner with Sun West Mortgage Company,” said Tom Millon, president/founder of CMC.  “The firm’s approach to offering additional mortgage solutions and long-standing Ginnie Mae direct issuer status brings new competitively priced options to our membership.”

According to Pavan Agarwal, executive vice president of Sun West Mortgage Company, “We are proud to partner with Capital Markets Cooperative and member firms. CMC’s groundbreaking approach to mortgage banking fits with Sun West’s philosophy of helping our clients increases CMC’s product offerings which, in turn, benefits local borrowers.”

CMC recently announced that WL Ross & Co. LLC (“WL Ross”), a leading private equity investment firm founded in 2000 and led by Wilbur L. Ross agreed to make a strategic investment in the company.

“We have been very impressed by Tom Millon, his CMC team, and their strong network of partner financial institutions,” said Wilbur Ross, Chairman & CEO of WL Ross.  “We look forward to working with CMC to expand the services that they can provide its partner institutions.”

Not surprisingly, origination volumes are down lately at Sun West, which got into the reverse mortgage business in 2004. Agarwal tells RMD that the company has experienced a 30 to 40 percent reduction in HECM volume this year due to the reduced principal limit factors and a depressed housing market. “However, Sun West has more than compensated for the drop through an increase in its FHA forward and commercial lending channels,” he assures listeners.

However, the generally depressed housing market is an area of concern, says Agarwal, explaining that reverse mortgage originators should be beware of investors who attempt to put a senior in an upside-down property. “If you originate a loan like that,” he warns, “you [end up having] seniors who may not be committed to the property; who may never have owned a property before and doesn’t understand what the responsibilities of a homeowner are.”

Agarwal believes there is no “one-size-fits-all” reverse mortgage customer. “You have to know what is important to each borrower,” he says. “An older customer may opt for lower upfront closing costs in exchange for a higher note [interest] rate. A lot of borrowers took money out and went for no closing costs but with higher margins,” Agarwal says. “They didn’t get as high a PLF [loan amount] but like the idea of not using their home equity to pay closing costs.” Hands-on care seems to be the prescription.

Written by Neil Morse