Flagstar Bank and the one-stop mortgage shop

FLAGSTAR BANK, a top-25 U.S. mortgage lender, has long described itself as a “one-stop mortgage shop.” Flagstar made news in recent months, expanding its footprint and further diversifying its business model with the completion of the merger with New York Community Bancorp (NYCB) and the acquisition of certain financially and strategically complementary parts of Signature Bank.

But it has built its reputation on its expertise in mortgage. So what exactly is a “one-stop mortgage shop?”

“We can do everything, whatever it is you need,” said Lee M. Smith, senior executive vice president and president of mortgage at Flagstar. “From a mortgage point of view, you can come to Flagstar and we can take care of you.

“Flagstar is an originator and servicer that also provides financing solutions through its warehouse and MSR lending businesses,” Smith said. “We can buy loans, sell loans, buy mortgage servicing rights, sell mortgage servicing rights, and we have our own residential mortgage-backed securities capabilities. And now, thanks to our acquisitions from Signature, we also can offer cash and treasury management services that focus on mortgage clients and businesses.”

The bank serves both business-to-business and business-to-consumer clientele. On the origination side, Flagstar originates in all six delivery channels — broker, delegated correspondent, non-delegated correspondent, bulk, distributed retail and direct-to-consumer.

“It doesn’t matter whether you’re the biggest hedge fund in the country investing in mortgage assets, a third-party originator or you’re an individual borrower looking for a mortgage, you come to Flagstar, and we can take good care of you,” Smith said.

Flagstar has been around for more than 35 years and has always focused on mortgage, even as it grew its banking and commercial business. If anything, it’s only doubled down on its commitment to the mortgage industry now that it’s a much bigger bank.

“If you think of all of the challenges that an institution like Flagstar has seen — that we’ve navigated through all those cycles and have always been there for our business partners, it’s remarkable,” said John Gibson, senior vice president and national sales director of wholesale and correspondent lending for Flagstar.

“Our partners have always known they can count on us. We’ve never exited a channel — we’re the only bank that’s actually stayed in the broker space throughout all those years and still continues to grow in that space.”

Recent Growth

Speaking of growth, the merger of NYCB and Flagstar, and the addition of the businesses that came with Signature, has created a $124 billion bank. The three companies coming together have very little overlap and work well together, according to Smith.

“If you think of Flagstar bringing a unique commercial banking and mortgage expertise, New York Community

Bank with its multifamily expertise and Signature Bank with its private client group and its expertise in dealing with high net worth customers, it’s a very complementary business model,” he said.

Another result, Smith said, is a strengthening of the liability side of the balance sheet given the much more diversified and stronger deposit mix, which has resulted in the combined companies having a loan-to-deposit ratio that’s now less than 90%.

Now, with the three companies under one Flagstarbranded umbrella, the bank can offer its clients an even larger array of products and services.

“We’ve got more capital and more firepower [so] we’re able to do more with our existing clients,” Smith said. “The good news is, you’ve got three organizations whose values and cultures [align] and everybody’s working together to make it as seamless as possible for our customers while increasing the number of service offerings available to them.

Helping Partners Succeed

Even with all the growth, mortgage remains a fundamental and very important vertical of Flagstar. The organization continues to focus on helping its mortgage business partners succeed. Gibson highlighted a few ways the bank helps support its clients.

First, the bank has several support systems for its business partners, such as dedicated sales assistants and client advocates who can help on the manufacturing side of originations.

Second, Flagstar brings value to its partners by providing resources like their monthly FLEX series that has featured speakers such as Dave Stevens and Barry Habib who offer market intelligence and insights on how clients can grow their book of business in today’s challenging market.

And third, Flagstar’s account executives are spread throughout the entire country, working locally in the markets where its partners do business. On average, these account executives have been with the bank for nearly 16 years.

“The experience and the knowledge that they bring, not only from a process perspective, but also the expertise that they bring on product and depth of knowledge about the market — I think that’s one of our secret sauces,” Gibson said.

Flagstar’s account executives can do business in all its channels, making it easy for clients who work with them to change to a different delivery type — for example, brokers who want to move to the correspondent channel.

“We have 30-plus years of helping our business partners evolve,” Gibson said. “Because our account executives are experienced in the different delivery channels, that transition is seamless, and our AEs are able to educate their partners and support them along the way.”

Looking Forward

As the mortgage industry cycles through a rough patch, Flagstar is positioned to continue to succeed.

“I think 2023 is going to be a tough year for mortgage, but Flagstar has done what we needed to do to restructure our business so that we can be profitable in any interest rate environment,” Smith said. “I do think 2024 and 2025 are going to be good years for the mortgage industry as the Fed pauses and eventually reduces interest rates.” Gibson noted that anyone who’s been in the industry for a period of time has experienced these highand low-interest-rate cycles. With Flagstar’s longevity, the bank and its team are prepared to continue to support partners through any cycle. In fact, where other companies look to downsize and reorganize their mortgage shops, Flagstar continues to grow.

“We’re investing in the TPO channel and we continue to support the channel by opening up and growing new business relationships,” he said.

Flagstar is listening to its business partners and expanding its product set, as well as investing in technology to improve ease of use and efficiency.

“Ultimately, our strength and our commitment to the TPO channel has been unwavering,” Gibson said. “We’re one of the companies that is continuing to grow.”

Trade associations from across the housing industry are on the front lines of issues that lenders, real estate agents and everyone in between face every day. In these letters, they give their members an inside look at what they are working on, and the most important issues facing each industry today.

Katie Sweeney

Chairman and CEO

AIME members,

As the summer progresses and market uncertainty continues to dominate the topic of conversation, I hear many mortgage professionals looking for solutions. As a business owner, this market has challenges that determine your bottom line — your very livelihood.

As an LO, your pipeline may be challenged to stay full or even active.

This is what many people across the country are facing — uncertainty. Where will my next loan come from? Will the referral pay off? How can I find more business? How can I run leaner?

Market cycles dictate our business forecast and impact our teams in many ways, but the one thing that holds true is the need to constantly hone your craft. As independent mortgage professionals, our community is used to being flexible. We have 70+ lender options available to find the home loan solution that’s best for borrowers. But even more than that, we have a community of experienced mortgage professionals to draw upon.

That’s exactly what we’re leaning into at our 6th annual Fuse National Conference in October — the expertise that’s within our trusted community. This year, it’s even more important to come together to learn new strategies from the industry’s best and brightest to manage your business, train your team and leverage the tools that are available.

This is how we not only survive this market cycle, but succeed in it.

In the spirit of unity and progress, I urge you to join us at the Fuse National Conference. Let us celebrate our achievements, forge meaningful connections and empower ourselves with knowledge. Together, we can shape the future of the housing industry and continue making a positive impact on the lives of countless individuals and families.