How EPM plans to win in the TPO channel after exiting retail

Equity Prime Mortgage (EPM) has completely shifted to the TPO business after seeing growth opportunities in the wholesale channel, a distribution channel that’s been growing in recent years.

The Atlanta-based lender has fully exited the retail channel, a change in strategy the company has been preparing for over the past few months. EPM’s CEO Eddy Perez had previously shared plans with HousingWire to double down on wholesale while scaling down its retail footprint.

“The cost structure had nothing to do with it,” Eddy Perez, said in an interview on Thursday.

“The decision was made in the last 30 to 45 days after the lender saw growth of more than 400% in production volume in the wholesale channel over the past two years,” Perez said. 

The pivot also coincided with its former chief retail officer Stephen Carpitella requesting the opportunity to start his own wholesale mortgage business. Many of EPM’s retail loan officers transitioned to Informed Mortgage, a lender Carpitella launched in August. 

While other wholesale lenders – including loanDepot, Point Mortgage Corporation and Stearns Wholesale (owned by Guaranteed Rate) – have exited the channel, EPM is prioritizing competitive pricing and strong communication with brokers to bring in volume.

“As a broker, one of the most frustrating things is, when you get the approval, he/she has no idea what half the conditions are,” Kevin DeLory, EPM’s chief lending officer said Wednesday in an interview. “We make sure our underwriters send out a video with every approval so that they are articulating exactly what is in our condition.”

The new broker portal ‘Core’ aims to give real-time updates to borrowers and enable brokers to track where the loan process is at. 

“We saw a gap in the market for needs that were not being met like real-time updates to realtors, notifying the borrower the same time you get notified as the broker, and having your pipeline at your fingertips at all times,” Perez explained. 

Among the 7,000 brokers that sent loans to EPM, up to 2,000 are active brokers that do business with EPM every 90 days. 

What’s more important is that the company gets on average 10 inquiries from brokers everyday asking how they could do business with EPM, DeLory said.

EPM’s TPO business consists of the broker and non-delegated correspondent channels. 

“It’s all about the consumer. I really believe that non-del and wholesale is the future of the industry. A lot of the p&l retail branches will become their own broker or move to the non-del model,” Perez said Thursday. 

By October, the lender plans to have between $500 million to $600 million in origination volume – the broker business raking in $360 million to $380 million and the remainder coming from the non-delegated correspondent channel. 

Origination from the non-delegated correspondent consists of 10% of the entire production volume today, and EPM’s goal for that channel is to comprise about 20% of the mix in two months. 

The broker channel made up for 16.8% and the correspondent channel consisted about 26.8% of the first-lien mortgage origination in Q2 2023, according to data from Inside Mortgage Finance. Compared to Q2 2022, the correspondent channel grew from a distribution of 24.1% and the broker channel from 13.9%.

As part of its “strategic realignment” efforts, EPM has shed costs associated with its retail channel and allocated remaining staffers to other departments.

EPM originated $1.05 billion across 3,158 loans in 2022, according to mortgage data platform Modex

The lender brought on Bill Shuler as the new chief information officer (CIO) in August to overlook company growth strategies and tech stack for brokers. 

Phil Mancuso, EPM’s CIO, was named president to help lead the executive team, work with warehouse lines and ensure its pricing strategy stays competitive.

“I see another year-and-a-half of sustainable pain for those who are unwilling to evolve and adjust and realize what the future is for the consumer,” Perez said. “The next 18 months will be brutal for those who are not willing to do it. The second quarter of 2025 is when inflation will lower and three years of elevated interest rates or approx. 15 million loans will neutralize, and refi market will be upon us. We will be ready for it.”