Naysayers prepare to eat your words: Hundreds of brokers have now welcomed Xceed back into the fold, registering to do business with the lender despite what its president calls some “skepticism” about how long it will stick around.
“Yes, we have registered 200 brokers in the weeks that we’ve been back in the broker channel, and we’re not going to stop there,” Michael Jones told MortgageBrokerNews.ca, pointing to growing interest among mortgage professionals. “Yes, there is some skepticism about our return to the broker channel ... but what brokers need to know is that we will stay in the channel as long as we can add value and make a healthy return.”
Last month MortgageBrokerNews.ca broke the news that the company, having settled an outstanding legal dispute with funding partner HSBC, had come back to the broker channel. The return ends an hiatus begun in January and taking many of its broker partners by surprise.
That may now be water under the bridge for the growing number of residential specialists drawn back to the lender, now entirely focused on A deals.
Broker feedback also affirms the company’s decision to go with a simple upfront compensation structure, eschewing minimum volume requirements, even if it means doing away with volume bonus, suggested Jones.
“I think a lot of large lenders today are focused only on those large brokerages that will bring them large numbers of funded deals,” he said. “We are working with small- and medium-sized brokerages. We know who we’re dealing with and there’s a relationship that should” translate into a significant amount of business.
Broker appeal may also have something to do with Jones decision to offer 110 basis points on five year deals and 90 bps on three-year ones.
Still, some brokers remain concerned about the longevity of Xceed’s return to the channel.
The lender quietly began reaching out to agents and brokers as early as September, more than seven months after it ceased using external brokers on Jan. 14, 2011. Its chairman, Ivan Wahl, cited the cost of originating insured mortgages through the channel, among other reasons for the exit.
The timing of this summer’s comeback directly correlates with the company’s $1.7 million settlement with HSBC on August 21, Xceed Mortgage disposing of the bank’s claim that it allowed subprime borrowers to refinance when, in fact, they should have ushered them on to foreclosure.
That end of the business is now off of Xceed’s agenda. It now faces slightly different challenges in the mature A sphere.
It means lenders are increasing competing for a dwindling number of originations as brokers grapple with a slowing real estate market.
While Xceed’s compensation model is attracting broker interest, it’s not the only one creating buzz among brokers.
This week, upstart A lender MonCana ignited broker interest with the announcement it will offer 50 basis point renewal fee on all funded deals.