PrimeLine Capital thrives in a changing mortgage landscape
Undaunted, they also have a plan to negotiate around these issues.
“There are still a lot of refis out there,” Lawson said. The refinance boom of the past two years may be faltering under the stifling of rising rates, but: “We mostly do cash-in refinances,” Lawson said. Indeed, the company has increased its share of refis from around 10% last year to a level that now hovers around 30%.
Escaffi explained, “When rates go up, we move into withdrawal refis and buy refis,” he said. “Collection is not dead, because with rising house prices, there is more equity to tap into. The other thing affecting it are supply constraints in the market as buyers struggle to buy homes. If they can’t buy houses, they try to make their current house even nicer. So they dip into their capital to do home renovations and improvements. There are still plenty of opportunities. Overall, everyone’s numbers are down but, relative to the competition, we’re holding our own.
The two also took a closer look at the provision of non-QM loans – a segment that has emerged prominently as industry players adapt their tactics amid mercurial rates. “In December, and even this year, we spent quite a bit of time trying to figure out how to incorporate non-QM into our business,” Lawson said. But after contacting a lender for information, no one was able to explain ways to market the segment to potential customers, he said. “We have just spoken to another lender and are engaging with them,” he said, adding that the goal is to have the proceeds by April to represent around 10% of the company’s business.
Escaffi is also without panic in the face of a changing landscape. “We are both very confident,” he said. “The industry is definitely going to contract. When interest rates go up and the market gets tougher for mortgage companies, what happens is the pie gets smaller and companies and loan officers usually fall. But we’re firm believers that the cream always rises to the top. If you’re really good at what you do, take a bigger slice of the pie. We’re not afraid the market will get tougher, c is just the environment we have to play in now.