Building on the momentum created by last year’s acquisition of Caliber Home Loans, Newrez LLC has partnered with local news platform Patch to market home loans to prospects in more than 1,200 communities across the U.S.
Newrez and Patch Media announced an “exclusive, multi-year partnership” Thursday to provide a co-branded homebuying mortgage resource hub at Patch.com.
The mortgage hub positions Newrez “as a national go-to source for expertise and education on mortgages and the homebuying process,” the companies said in a press release.
Baron Silverstein
“As a mortgage lender, our mission is to empower current, as well as prospective borrowers, by providing mortgage expertise and innovative products that allow them to explore their financial options and ultimately make the most educated decision on what is best for them as homebuyers,” Newrez President and COO Baron Silverstein said in a statement. “Through this partnership, we look forward to serving as a resource for homebuyers at an even larger scale and look forward to working with the Patch team as our partners to make it happen.”
Once known primarily as a loan servicer, Newrez’s parent company, New Residential Investment Corp., has been growing its mortgage loan origination business, allowing it to claim a place among the nation’s top five nonbank mortgage lenders.
In addition to refinancing mortgages it services through its direct to consumer channel, New Residential has been growing its purchase loan business through retail, joint venture, wholesale and correspondent channels.
New Residential’s $1.675 billion acquisition of Caliber Home Loans, which closed in August, helped accelerate that trend, with purchase loans accounting for 42 percent of the $123 billion in home loans originated by New Residential in 2021.
New Residential loan originations by channel
Breakdown of 2021 mortgage originations by New Residential Investment Corp. subsidiaries, in billions of dollars, by channel. Source: new Residential Corp. 2021 annual report.
According to New Residential’s most recent annual report to investors, as of Dec. 31, the company employed 1,450 loan consultants working out of 367 retail branch locations. New Residential also has joint venture partnerships with Realtors, homebuilders and mortgage banks through its subsidiary, Shelter Mortgage Company LLC.
Newrez has had particular success with its “Smart series” mortgages, which are often “non-QM” loans that do not meet the Qualified Mortgage rules set by the Consumer Financial Protection Bureau, including:
- Newrez’s SmartEdge mortgage, which is targeted at borrowers who fall “just outside of standard agency and prime jumbo programs,” providing loans of up to $3 million.
- The SmartSelf loan is marketed to self-employed borrowers, allowing them to use bank statements or asset amortization rather than paystubs or tax returns to qualify.
- Newrez’s SmartVest loan is intended for “experienced real estate investors with multiple financed properties and complex finances,” using cash flow analysis rather than debt-to-income ratios to qualify borrowers.
Rising interest rates have forced mortgage lenders to target homebuyers, as the more lucrative business of refinancing homeowners’ existing loans dries up.
New Residential chairman, president and CEO Micheal Nierenberg sees the company’s acquisition of Caliber, and the potential to originate more Smart series mortgages, as keys to future profitability.
“The past two years in the mortgage origination business have been very good,” Nierenberg said on a Feb. 8 call with investment analysts. “They will not be repeated.”
Gain on sale margins will come under pressure as mortgage rates rise, Nierenberg warned. But New Residential, Nierenberg said, has “many origination channels and different levers we can pull, which will enable us to adapt quickly to whatever the gain on sale climate looks like.”
Going forward, Nierenberg “the purchase market will be a much larger percentage of the origination market, and we are well-positioned for what’s going to come ahead. The integration of the two organizations [Newrez and Caliber] … has been coming along extremely well.”
During the fourth quarter, Nierenberg said New Residential originated $700 million in Smart series loans, and expects to originate “something close to $1 billion” during the first quarter of 2022.
Non-QM loans are often marketed to borrowers who might have trouble qualifying for loans eligible for purchase by Fannie Mae or Freddie Mac — because the loans are too big, or borrowers can’t meet stringent underwriting standards.
With many of New Residential’s competitors focused on originating qualified mortgages that can be sold to Fannie Mae and Freddie Mac, “we will not get into a price war with anyone,” Nierenberg said of the company’s Smart series loans.
On the same call, Silverstein noted that about 50 percent of Newrez’s Smart series loans have been made to qualified self-employed borrowers.
“We continue to see growth in our Smart series programs as approximately 75 percent of these (originations) have been to purchase customers,” Silverstein said. “And to date, only 10 percent of our sales force has participated so far.”
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