DOVER – Homegrown mortgage banking firm Keystone Funding has experienced tremendous growth in recent years to rank among the nation’s fastest growing private companies, but with the addition of an industry leader it’s now poised to take an even bigger step forward.
[caption id="attachment_213089" align="alignright" width="360"] Kevin Harrigan[/caption]
Keystone recently announced that Kevin Harrigan, the former president and CEO of NewRez LLC, has taken over as chairman of its board of directors. Harrigan arrives after overseeing NewRez’s explosive growth from a company originating a few billion dollars in loans a year to originating more than $20 billion a quarter at the end of last year – making it one of the fastest growing mortgage bankers of the last few years.Keystone hopes that Harrigan can help expand the horizons for the already successful Dover-based firm – it ranked 766th on the 2020 Inc. 5000 list of fastest growing private companies in the U.S.“Folks hitch their wagons to people who have a vision,” Keystone CEO Tim Paret said. “We want to disrupt the industry in a really positive way for our employees, customers, and brokers, and I'm certain Kevin believes we have the potential to do that.”Keystone is owned by a collection of local investors, all but one of whom are Delawareans. It was founded 15 years ago by Jared Martin, an MIT grad who developed a tech platform to assist loan officers. Today Martin serves as chief technology officer while Paret invested in the firm and became CEO three years ago.While many of the nation’s largest lenders focus on one customer channel – think Rocket Mortgage or Loan Depot’s direct-to-consumer approach, or United Wholesale Mortgage’s broker-focused approach – Keystone continues to spread its resources.As a multi-channel mortgage banker, Keystone offers direct-to-consumer loans via its website and aggregators like LendingTree, traditional loan officer relationships with local real estate agents and homebuilders, and wholesale relationships for the mortgage broker industry.“Those three methods put us in a position where we can access a larger majority of customers across the country, because we are dipping our toe in the water across all of those distribution channels,” Harrigan said.Keystone has grown quickly due primarily to its direct-to-consumer offerings and wholesale mortgage loan business, where it develops relationships with mortgage brokers around the country in order to book dozens of originated loans. It has established connections in markets like Philadelphia, Florida, North Carolina, Maryland and Virginia, with satellite offices in many of those areas.“If we can get an hour with them on the phone and show them what we offer, almost every time we get loans from them,” Paret said. “And when we get loans from them, we often get all of their loans.”Harrigan explained that today’s mortgage industry is heavily commoditized, meaning companies need to either be able to compete on pricing or service.“A mortgage is the biggest financial decision of somebody's life, and typically the largest financial commitment of somebody's life. And people are afraid,” he said. “We homed in on that concept and said, ‘We are going to eliminate the fear.’”NewRez found success through that “white-glove” service by employing total transparency, establishing long-term relationships with customers and servicing the loans after completion.Like most smaller mortgage bankers, Keystone currently sells a completed mortgage to a larger lender for servicing over the long term, but Harrigan intends to change that dynamic.“We'll have that full lifecycle experience as we bring servicing into our strategy,” he said.The chairman expects to take the next 90 days or so to develop a strategy and assess potential partners that can help properly capitalize Keystone for such a jump. He hopes to launch that full-service approach within the next year.Keeping customers engaged with Keystone after signing on the dotted line isn’t just about accruing servicing fees paid by Fannie Mae and Freddie Mac, but about growing potential for additional business. Harrigan noted that about 60% of Rocket Mortgage customers who seek additional loan products do so through Rocket Mortgage because of the existing relationship.“As we start to invest more in acquiring customers, it will become more important for us to keep those customers,” he added.Adding to the changing mortgage lending market are the technological advancements made during the pandemic, including the growth of e-signings, touchless closings, and virtual appraisals.“Where I think everybody sort of had a gloomy and doomy outlook when this whole thing hit, I think the industry actually benefited and I think a lot of the things that were done through necessity,” Harrigan said. “Now it has become an opportunity for companies to do things in a much more cost-effective, efficient way than before.”While the number of refinanced loans has skyrocketed over the past year due to historically low interest rates, Harrigan noted that part of being a full-service firm includes being prepared to offer other products, like debt consolidation and home equity loans, when rates creep back up.“If you're a smart lender, you have your eggs in the refi boom basket during the refi boom, but you're always prepared to be on the other side of that rainbow,” he said.