COVE R STORY
CLASSIFIED STRATEGIES
History Says UWM Offense Looks Like A Winner WHY A SECRET ELLIE MAE PROGRAM MAY SHED LIGHT ON HOW UWM COULD WIN THE WHOLESALE WAR
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By R ICK R O Q U E, M ORTG AG E BAN KE R M AG A ZIN E CON TRIB U TIN G WRITER
t was October 2009, and I was driving through the canyons of the East Bay, in northern California, heading to the Ellie Mae headquarters in Dublin, California. The market had crashed a year earlier, Indymac, Lehman Brothers, Wamu and First Magnus had all shut the doors, unemployment was at 10%, and $498 billion in targeted federal bail-out funding (via The Troubled Asset Relief Program, or TARP) had passed to bail-out auto-manufacturers and America’s largest banks. The markets were illiquid, state and federal regulators were shifting mortgage market demand toward depositories while negotiating an appropriate regulatory framework to oversee brokers and non-depository mortgage banks. The future of the mortgage industry was deeply uncertain. The Implode-O-Meter became a daily site to get updates on companies that had failed. As banks shut their doors, the market threat was a shutdown of cashflow to all businesses, large and small. I was thinking of all of that as I made that drive to Ellie Mae, an important meeting and they had emphasized the confidential nature of the discussion. It was the start of the Great Recession and there were many shadows and backroom discussions being had. Everyone needed a plan, but it was difficult to see the future amidst so much uncertainty.
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HATCHING A PLAN
s I walked in, Jonathan Corr, the president of Ellie Mae, greeted me at the front door and proceeded to escort me to a private conference room where Sig Anderman, CEO and founder, and Joe Langner, chief sales officer, sat around a large conference table. It was strange. Despite the mortgage industry
in eclipse, walking into the Ellie Mae headquarters, there was a fresh vibe in the air. The activity was busy, even disregarding the many empty cubicles. Jonathan reassured me those would be full again in the coming months; Ellie was poised for growth. It is difficult to explain, but while outside of the doors, there was the American economic system in chaos, and yet, inside Ellie Mae’s walls, there was extreme confidence in the future. Why? Sig, the company CEO, closed the door to the conference room, and proceeded to outline the plan. But first, he summarized the market outlook. In 2008-2009, many mortgage originators – and potential clients of the firm-- had gone out of business. Ellie had lost money in 2008: it had revenues of approximately $33M, but it’s bottom line still showed red ink of more than $1 million. The Loan Origination System (LOS) wars were at their epic peak – Calyx, Mortgagebot, Byte, Avista, Open/Close, Mortgage Cadence, Harland E3, Blueberry, PCLender, Mortgage Builder, to name a few. It was a crowded field to say it mildly, but everyone was losing clients. Sig saw the market contraction as an opportunity, since these events were hurting his competitors, especially market leader Calyx. Calyx’s revenue contraction was severe, falling from about $40 million to a historic low of roughly $9 million; it existed anemically, he argued.
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TURNING POINT
till confused, I peered over to Jonathan seeking for some direction as the more Sig summarized the problem statement, the more confused I grew. I did not see the strategy. I saw an uncertain market, a crowded field of competitors and a long uphill climb to get marketshare from mortgage companies that may not weather the market storm. CONTINUED ON PAGE 16
14 MORTGAGE BANKER | APRIL 2021
