Last year, Tony Adkins was ranked by an industry trade publication as the 10th-busiest originator of Department of Veterans Affairs (VA) loans. What's particularly noteworthy about that achievement is Adkins is a senior vice president of the Western region for the relatively small Phoenix-based lender Alliance Financial Resources LLC (dba Alliance Home Loans). [paragraph] There are 1,500 licensed VA lenders in the country, and according to the government agency, by third-quarter 2015 loan volume, Alliance Financial squeezed into the top-100 rankings at position 94. That's just one spot behind North Texas Financial Network, Plano, Texas, and ahead of Colonial National Mortgage, Fort Worth, Texas. [paragraph] Unfamiliar with some of those names? That might be because the VA lending business has been dominated by a wide assortment of nonbank lenders--not the big commercial banks, with a few exceptions. [paragraph] According to the VA, from third-quarter 2014 to third-quarter 2015, the only big banks in the top 10 for loan volume were San Francisco-based Wells Fargo & Co. at No. 4 and Charlotte, North Carolina-based Bank of America at No. 10. [paragraph] The other lenders in the top 10: Quicken Loans, Detroit, (No. 1); Freedom Mortgage Corporation, Mount Laurel, New Jersey (No. 2); USAA, San Antonio, Texas (No. 3); Mortgage Research Inc., New York (No. 5); Navy Federal Credit Union (NFCU), Vienna, Virginia (No. 6); loanDepot LLC, Irvine, California (No. 7); Flagstar Bancorp Inc., Troy, Michigan (No. 8); and Sun West Mortgage Co. Inc., Cerritos, California (No. 9).
"Banks used to dominate the top 10," observes John Bell III, assistant director of loan production and valuation at the Department of Veterans Affairs. "At the end of the day, we are grateful that non-banks have been supportive of veterans and the program."
Independents "just crush the big banks when it comes to VA loans," asserts Louise Thaxton, a regional manager who heads VA lending efforts and the military boot camp campaign for Fairway Independent Mortgage Corporation (ranked No. 27 by VA for loan volume in the third quarter), from her office in Leesville, Louisiana.
"If you look at a fast-growing state like Arizona, USAA is No. 1. Wells Fargo is No. 5," she says. "The way I sustain market share even in military towns is that I can close a loan in 10 days. The big banks can take 45 days."
It's not just about speed. As Adkins points out, "I can't say I find a lot of competition when it comes to pricing, at least as compared to the big banks."
He adds, "I've done thousands ofVA loans, and I always say, 'Please shop around so that you are confidant you are receiving the best possible deal.' Many walk across the parking lot and stop at Wells Fargo. They come back and say to me, 'They offered the same loan with only $3,000 more in closing costs.'"
There are about 800,000 loan originators in the country, Adkins estimates, so a top-10 ranking for VA loans is pretty darn good--except this year it will be even better. For the first half of 2014, Adkins originated 261 VA loans. Through the first half of 2015, he estimates he's done 300 VA loans.
But better numbers don't necessarily ensure a better ranking. Everyone seems to be doing more VA loans in 2015.
A cannonade of work
The VA loan was always an enviable financial construct. It could cover 100 percent of the mortgage, there's no down payment or mortgage insurance and it's cheaper than a conventional mortgage.
The VA loan offers a lower interest rate than any other product out there, Bell says. When Mortgage Banking checked in with Bell in late summer, he reported the average interest rate on a conventional loan was 4.218 percent, the Federal Housing Administration (FHA) loan sat at 4.047 percent and the VA loan looked good at 3.81 percent.
The attractiveness of the VA loan was always there, but the program was somewhat under the radar even for some veterans. That all has changed in recent years.
The VA has amped up marketing and education, and then on the technical end, new efficiencies have been introduced from further automation of loan processing. Lenders have found the VA loan to be a good product offering and they, too, have improved their own education and outreach.
Also, the mindset of new veterans is much different than those who served in the Vietnam War--the last lengthy, major war involving the United States before its participation in Middle East/Persian Gulf conflicts.
Finally, with President...