Case Study: On Q Financial Grows Correspondent Channel Through BAM Marketplace

We recently had the chance to speak with Angela Wooldridge, VP of Margin Management at On Q Financial, which is leveraging MCT’s, newly-released BAM Marketplace loan exchange to launch and grow its correspondent channel. On Q Financial also utilizes MCT’s Security Spread Commitment and MCT AutoBid technology which has helped to give buyers on the platform unparalleled access to new sellers.

On Q Financial is a national organization headquartered in Tempe Arizona. As one of the top mortgage lenders in the U.S., its motto is “MORTGAGES SIMPLIFIED.” Since the debut of its correspondent channel at the end of 2020, On Q Financial has been looking to develop new client relationships while also maintaining and growing existing client relationships to increase value and volume of marketshare.

In this case study, Ms. Wooldridge describes how MCT’s BAM Marketplace enabled her to decrease her average approval times with sellers, tailor pricing granularity to her desired levels of specification, and increase loan volume as a correspondent buyer. Her use of MCT’s software has also allowed On Q Financial to have an edge over the competition, finding counterparties for niche production when and where she wants to create an axe. On Q has accomplished all this despite industry challenges such as changing GSE guidelines.

Benefits of BAM Marketplace for On Q Financial

When BAM was released, On Q Financial was excited to see what further growth opportunities for its correspondent channel now lay at its fingertips. On Q Financial has been using BAM Marketplace, the world’s first truly open loan exchange, successfully for several months.

With its recent introduction of BAM Marketplace, the world’s first truly open loan exchange, MCT has moved toward the ultimate secondary marketing goal – a loan exchange where every loan can be priced by every investor, regardless of approval status. “Gone are the days of a finite set of investors, not knowing who has an axe or who may offer the best price,” said Curtis Richins, President, MCT. “BAM Marketplace is the only exchange where sellers can receive executable bids from unapproved buyers.”

Using BAM Marketplace, Angela and the team at On Q were able to realize significant growth in their correspondent channel over a short period of time, while delivering an excellent experience for sellers. Some of these benefits include:

Contact us for a demo of BAM Marketplace for new or established correspondent buyers.

Case Study Interview Question / Answers:

What originally prompted you to sign up for BAM Marketplace?

On Q Financial wanted to launch a correspondent division, and the quickest way to do that was with a mandatory trade desk. We were working on other things like single loan, best efforts, and non-delegated at the same time, but we were in the market to find a trading platform that would suit our needs. We demoed a couple and MCT fit the bill. One of the main things was that BAM Marketplace was very customizable.

What was your process for buying loans before joining the exchange and how has that changed?

We weren’t buying anything for On Q Financial via the correspondent channel before BAM Marketplace. We bought our first correspondent loan via MCT. On Q Financial has historically been retail, but when we decided to stand up a TPO division, our timeline was mandatory trade, correspondent flow, best efforts, then wholesale, and we have done it in that order. MCT was instrumental in the setup and rollout.

Oh, absolutely. It has been instrumental in growing our correspondent base because MCT offers immediate exposure. If you don’t have a platform like MCT, your Account Executives are on the street requesting shadow bids, which our On Q account executives are rockstars at. But MCT’s BAM Marketplace creates that exposure for you and helps facilitate a connection between the customer and on On Q sales person, so then instead of spending time up front asking for apps and requesting shadow bids, our Account Executives instead have the opportunity to spend that time having conversations – getting to know the customer’s pipeline, talking about color and building the relationship.

We can go into BAM Marketplace and see what our rank was on customers that we don’t do business with. We can then go to an Account Executive and say “It looks like we are coming in ranked one, two, or three on these low FICO government loans for this customer. Go get ‘em!” Or a customer can notice us and say they want to sign up with On Q Financial before we even have a chance to look at the color.

Do you see that bid volume continuing to grow over your time on the platform?

With the MCT platform, and considering the functionality and ease of use of BAM Marketplace, continued growth should definitely be achievable.

According to MCT data you’ve seen 31 lenders signed up and committing since joining BAM Marketplace 10 months ago. How has this compared to your expectations for using the platform?

The growth rate is great, and we always want it to be more because we are in growth mode, but we are very pleased. At On Q Financial, we are all about the security spread commitment and really encourage it to those we do business with. We have had customers that have used it and have had customers that didn’t quite understand it or were under pressure to lift their hedge and were unable to utilize it. When that happens and they go with someone else, it’s unfortunate.

Of the times we have offered it to people who were interested in us, it has made it easy for streamline approval on our end. We’ve had approximately three users execute that way for us. It’s definitely a neat feature that MCT helps us offer.

Has BAM Marketplace helped you approve new lenders and get them up and running faster?

Yes, because BAM Marketplace provides the client with what On Q Financial needs. And we’ve been able to streamline that. On average, we’re around 4 days to reach full approval after application and docs are submitted on our MCT customers, and the security spread commitment really helps. I encourage using it. You’re sitting on a commitment that they want to get off their warehouse lines, so there is incentive to actually get the paperwork in more quickly, respond to everything, and work with the Account Executive.

What has your experience been like pricing loans, managing margins, and setting loan and lender level specs using MCT AutoBid?

We’ve worked with the MCT team to develop the margin features to a more granular point that we required as part of the service. We did demo a couple of other platforms, but MCT’s customizability was what drew us in. We’ve been able to get to a point where MCT can tell me, “For a Conventional 30 with a 680 FICO and less than 80 LTV, if you’re within this number, you can get this much more volume.” It makes the MCT AutoBid process very reliable and easy to use.

Why would a lender want to sign up with you as a correspondent buyer? For what loan types is your pricing particularly strong?

We are one of the few correspondent lenders out there that have really strong low FICO Government pricing. That was something I know a lot of investors competed on prior to COVID and it kind of went away with many people saying they didn’t want anything under a 640 FICO.

When we first started our correspondent division, that was one of the things that we used as a marketing factor and it’s something that we continue to hold true to. We’re also really strong on some other niche products like manufactured homes and high LTV streamline refinances.

We can have strong Conventional 30 pricing one day and the next day our pricing can be good for Government High-Balances, so we definitely use the tools on the platform to suit our business model. (Editor’s note: MCT clients have experienced 89 bps pickup on low FICO Government production, and 46 bps on straight Government production)

What’s been your experience like working with MCT from a client services perspective? Are there any MCT staff that you have had a particularly good experience with?

Paul Yarborough and Justin Grant can attest that my requests are unlimited, and they’ve worked really well with me to get to that granular place where I want to be so I have no issues. Initially, there were not things available in terms of margin granularity on the platform, but I talked to Justin and Paul and they worked through it and those things are available now.

As we continue to grow and nurture the relationship, there are things that come to my mind where it would be like, “Oh it would be cool if we could do that,” and MCT will say they will put it in the queue and get it done for you, which has been great. If there is something that I want to do and I don’t see it, I immediately bring it up and it’s been fantastic working with those guys to accommodate my pickiness. They are both very responsive.