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VOL. 10 | NO. 46 | Saturday, November 11, 2017

Non-Bank Lenders See Business Rise Among Shelby County Homebuyers

By Andy Meek

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One byproduct of the steady upward climb in volume generated by Shelby County’s mortgage market over the past year or two is that banks – traditional brick-and-mortar institutions, that is – haven’t been the only beneficiary of the consumer demand behind that trend.

Borrowers in the market for a new home also are increasingly turning to nonbank outlets. To institutions such as Community Mortgage Corp. that focus only on mortgages – unlike banks, where mortgages are only one piece of the business among many – and to companies like Quicken Loans, an online-only lender.

Quicken Loans, in fact, was the top residential lender in Shelby County for all residential loans from January through April of this year.

Quicken vice chairman Bill Emerson told The Daily News that the company, which is the second-largest retail lender in the country, has been growing at a steady clip in markets like Shelby County for reasons that include consumers’ decreasing interactions with banks.

“The technology has shifted and changed in such a way that – there are certainly areas where people still walk in to their local bank, but a lot of people never step foot in a bank, right?” he said. “They’re trying to use technology wherever they can. And when it comes to ATMs and some technology as it relates to banking, they’ve been able to do that fairly successfully. But when it comes to mortgages in the bank space, they haven’t been able to do that successfully. They still have to walk into a branch and deal with somebody. And they don’t have to do that with us.”

Quicken was among the top nonbank lenders in 2016, a list that included Community Mortgage Corp., Mortgage Investors Group, Everett Financial Inc., Guaranteed Rate, SecurityNational Mortgage Co., Primelending, Envoy Mortgage, American Mortgage Services and Guild Mortgage, according to the most recent data from real estate information company Chandler Reports, chandlerreports.com.

Through Oct. 31 Quicken’s year-to-date mortgage volume in Shelby County hit $44.7 million, Chandler Reports data show. That’s up from $42.5 million during the same period in 2016 and $30.5 million during the same period in 2015.

Of the top 10 lenders in Shelby County through Oct. 31 as ranked by volume, four aren’t banks in the traditional sense. And all but one of those four mortgage-only operations saw an increase in their volume year-to-date through Oct. 31, compared to the same period in 2016.

Emerson said he thinks Quicken Loans will continue to grow its market share and that it’s continuously been able to increase its mortgage volume every year for at least the last five years. Quicken Loans closed a company-record $96 billion of mortgage volume across all 50 states in 2016.

Emerson attributes that in part to the company’s Rocket Mortgage product, an online mortgage experience that lets customers import and verify financial information, get approved and lock in a rate without speaking to a human being.

“It gives everybody the opportunity to understand in a transparent fashion what’s happening, what they quality for, and they can do it on their own time,” Emerson said. “They’re able to import income and asset data automatically. They don’t have to collect bank statements and W2s and a variety of other things they don’t want to.

“More and more of the population is this millennial generation, and they just interact differently with institutions. I think that’s a big reason for this.”

Another factor he cites is the singular focus of a non-depository mortgage lender, which unlike a regular bank doesn’t have other considerations such as checking accounts, wealth management products and the like.

“Mortgage matters to them more than anything else,” Emerson said of institutions like his, “so they think about how to make that experience the best it can be. Whereas from the banking perspective, it’s just another product that they offer.”

The growth in nonbank outlets isn’t necessarily coming at the expense of traditional channels. Most of the traditional banks that comprised the top 10 lenders in Shelby County year-to-date through Oct. 31 grew their volume numbers compared to the year-ago period.

Tommie Criswell, vice president and broker-manager for the East Memphis Crye-Leike Realtors office, encourages customers to think about the overall cost of their loan, not just the interest rate or being guided purely by that to one provider or another.

“It’s important to remember,” she said, “we have had nonbank lending options available in Memphis for years. The difference in today’s marketplace is, just as they shop for other items online, some consumers are choosing to shop online for their home loans.”

She says consumers often experience a “gap” in services with online lenders versus local lending choices. Dealing with a local lender, for example, provides individual direct contact for all aspects of the loan process – “a face with a name.” Local lenders also offer competitive and sometimes lower-priced loan options, she adds.

“It’s important for borrowers to consider the overall cost of the loan, not just the interest rate,” Criswell said. “When shopping for a home loan, consumers will do well to study the ‘other’ fees related to their mortgage and not just the advertised interest rate. It is the total cost of the loan which determines value, not just the interest rate.”

Chandler Reports is a division of The Daily News Publishing Co.

PROPERTY SALES 38 38 20,670
MORTGAGES 45 45 23,790
BUILDING PERMITS 187 187 42,781
BANKRUPTCIES 57 57 13,237