Like magic: Denver-based LenderLive is helping lenders originate mortgages profitably.

Author:Hewitt, Janet Reilley
Position:PROFILE
 
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I always think something's missing when I look at the name LenderLive. I have this urge to add an exclamation point--but then it sounds like a Vegas act. Picture the poster: Suspend your disbelief and come watch LenderLive! as it defies logic and perform acts of origination efficiency like never before! Bankers and credit unions, one and all, come check it out! [paragraph] Now, admittedly, that's not the type of marketing this Denver-based private-label, mortgage outsourcing company is looking for. But the company does perform acts that some might think come awfully close to magic. [paragraph] If you have been losing your shirt trying to originate mortgages, finding an alternative like LenderLive might be like pulling a rabbit out of a hat. [paragraph] Think about it: If you could outsource the whole process of mortgage lending, with all of its chronic pain points, to a company that clearly does it faster, cheaper, better--what's not to like? Give me a front-row seat. [paragraph] And that's what LenderLive does. There are a handful of players in this quiet, back-office, process-driven corner of the mortgage business where mortgages are assembled every day in someone else's name. It's called private-label outsourcing, and LenderLive takes it all the way through the sale of loans in the secondary market. And it's not really sleight-of-hand stuff, but it has been helping small lenders stay in the increasingly expensive game of offering mortgages to customers.

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And the real magic is that LenderLive seems to have found a way to thrive, no matter what's going on in the insanely volatile world of mortgages. (Not to mention the volatile world of outsourcing, where big-name companies have been losing big-name clients.)

And while LenderLive is in the mortgage space, it doesn't live or die by the direction of interest rates like front-line lenders do. It is not battling for consumer market share like its lender clients are. Instead it grows by attracting more clients. And that's something it can control independent of where rates are going.

As LenderLive Holdings Inc. Chief Executive Officer and Founder Rick Seehausen points out, a 50-basis-point drop in rates might bring some cyclicality to his company by triggering a small refinance wave among his customers. But, he says, that creates only a "micro impact" on his business. "The macro impacts to our business are when we bring on a major financial institution that intends to drive in hundreds and thousands of mortgage loans," he says.

In the last year, LenderLive has signed what Seehausen says are four major financial institutions as clients, and two of them are banks that were in mortgages before the crisis and are only now returning. Careful, compliant, efficient, cost-effective origination outsourcing and fulfillment is the lure that has led them back to the mortgage space.

Reviewing LenderLive's ever-changing history of product offerings gives you a sense of what nimble management looks like. Seehausen says this about that particular hallmark of his company: "If we have been blessed with one thing, it's our ability to be nimble and react quickly to the changes in the market."

They haven't yet mastered that part of the magic act where they see things before they occur--clairvoyants they are not. But strategic pragmatists and careful industry observers they most definitely are. Seehausen says, "So, no, I certainly didn't predict the crisis of 2007-2008, [but] we did react very quickly to it."

And that's not all they've had to react to in their 17-year history as a company.

A division of labor

Today LenderLive Holdings is a company made up of two distinct legal entities: LenderLive Network LLC, run by David Vida, president; and LenderLive Services LLC, headed up by Pete Pannes, president. The product line of the two put together is extensive, and the corporate structure isn't that simple, either.

On the one side, the company (LenderLive Network) operates just like a lender does, with the difference being that the actual borrower is hand-delivered by one of LenderLive Network's financial institution customers.

Then the other division (LenderLive Services) offers a menu of component services (like title insurance, closing services and mortgage document preparation) that lenders need to use when they are manufacturing loans themselves.

This two-unit structure allows LenderLive to try out and refine stuff in its own lending operation, and then offer it to the outside marketplace on an a la carte basis.

Seehausen describes the symbiotic relationship this way: "[It allows us to] incubate innovation within our own mortgage business and then leverage that innovation as an offering to others. That's important."

LenderLive Network is a licensed mortgage company that can do private-label origination and fulfillment. But it can also do secondary market execution for its outsource clients, whether they choose to sell their loans to LenderLive Network's correspondent division or if they want to sell to the government-sponsored enterprises (GSEs) or do a private investor execution.

LenderLive Services offers a long laundry list of services. Some of the things you can get are title and settlement services for first liens, reverse mortgages and home-equity lines of credit. You can also get title services for foreclosure and real estate-owned (REO) properties and recording services. The division also offers mortgage document services including e-delivery and e-sign, plus certified mail compliance document delivery for origination or servicing communications. Other product offerings include loan-modification document packages and default services (like title) for short sales and deeds in lieu.

It took a while for LenderLive to build out that lengthy product menu. It all started out pretty simple, but then opportunities presented themselves.

Jumping on opportunities

LenderLive Network Inc. was incorporated in July 1999. LenderLive Network immediately acquired the assets of two companies--IFS Direct and Preserv Financial Inc., according to a company history.

IFS Direct had some big-name clients that it provided firstand second-lien retail fulfillment services to from 1996-1999. They included Mellon Mortgage, Prudential Bank and Aurora Loan Services. The company also provided private-label origination and fulfillment services to community banks.

The other early acquisition--Preserv Financial--was a mortgage banking company founded by Seehausen that provided the nucleus of what would become LenderLive's technology platform. The company originated loans across a proprietary, state-of-the-art...

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