“Antares is focused on delivering the highest value services to its clients, leveraging deep expertise and leading technical capabilities and partners.”
Paul is a senior transformation executive with 25 years of experience leading change and building professional teams in financial services. He worked at Accenture as a Senior Manager for ten years. Soon he was the Managing Director at JP Morgan Chase, involved in Product Management for a couple of years, and then went on to be the Principal at E&Y for nearly a decade.
Having gained experience in the financial services advisory, he is a seasoned MD now at The Antares Company. He is involved in team building and serves clients at global and regional levels. Paul believes in delivering solutions to expand growth through digital technologies such as fintech partnerships, AI, and emerging smart technologies.
Q1. What unique aspects about the mortgage industry will surprise the average home buyer?
The housing supply today could surprise many customers, as a combination of worker and supply shortages have combined to reduce the supply to historic lows. This often results in “bidding wars” and purchase prices that exceed asking prices. It is important to have financing lined up in advance to increase the chances of securing the best properties.
Q2. What happens to a mortgage after a home is bought?
Mortgages are either retained by the lender or sold to another investor. The largest investors in the US are the Government Sponsored Enterprises of Fannie Mae and Freddie Mac, that purchase a significant portion of new and refinance mortgages. The mortgage is often still serviced – taking payments and providing customer service – by the original lender but this activity may also be transferred to another entity.
Q3. What are the different types of lenders? (e.g. retail lenders, direct lenders, mortgage brokers, correspondent lenders and wholesale lenders). How is getting a loan from Chase different from getting a loan from Rocket Mortgage?
There are essentially three types of lenders – retail, correspondent, and wholesale. Additionally, a consumer may work with a broker to arrange the loan. Retail, correspondent, and wholesale lenders all provide funding for new loans, while brokers simply arrange the loan with a wholesale lender. Retail lenders tend to facilitate the entire process, both interacting with the consumer and providing the funding – they typically keep a portion of the mortgages in their portfolio. Correspondent lenders interact with customers and fund loans, but generally sell those loans immediately and don’t keep them in their portfolio. Wholesale lenders fund loans, and may keep them, but don’t interact with the customer directly. Many banks operate as all three types of lenders, while independent mortgage companies tend to operate under the correspondent or wholesale model.
There are different channels that lenders and brokers use, including digital (online, mobile), physical locations, telephone, or field sales teams. Lenders like Quicken are more focused on the digital and telephone channel, while full-service banks offer a wide array of options including branches, telephone, as well as digital. Many independent mortgage companies maintain field sales teams. Different mortgage providers also tend to specialize on segments of the market, with banks focusing on their existing customer and independent mortgage companies focusing on various regional or consumer segments.
Q4. What is forbearance? What challenges did it present to the mortgage industry?
Forbearance is the ability to defer payments or portions of payments when a borrower encounters a financial hardship. Typically, the amounts forborne must be repaid either through a series of additional amounts on subsequent payments, or through a deferral, which moves the amount due to the end of the loan and is repaid in a single payment – usually when the loan is refinanced or paid off.
Forbearance is a flexible tool to assist borrowers, but carries the risk that the borrower will be unable to pay the additional amounts due once their hardship has concluded.
Q5. What should the family offices and investors understand about investing in RMBSs?
Residential Mortgage Backed Securities are generally of two types – government sponsored or private – and both carry two general types of risk – default and early repayment. Government backed RMBS, while not risk free, are considered low risk due to the implicit guarantee of payments by the US Government. This risk “backstop” is best illustrated by the events of 2008 when the government sponsored entities were taken into conservatorship by the Federal Housing Finance Agency, which then utilized US Treasury funds to guarantee investor payments. Private RMBS, often called private label securities (PLS) do not have the same implicit guarantee and, therefore, carry additional risk. Default is the risk the borrower will be unable to repay the loan, and early repayment is the risk that a borrower repays the loan prior to the maturity date, resulting in only a portion of the potential interest being paid.
Any investor should carefully read the prospectus of an RMBS offering to understand the nature of the mortgages underlying the bonds to understand to risk of default and early repayment. Several factors can influence both.
Q6. How did COVID-19 impact the mortgage industry?
The pandemic impacted the mortgage industry in a number of ways, but some of the key impacts were: 1) challenges associated with marketing homes, 2) complications in the origination and servicing operations due to remote work requirements, and 3) an interruption to the supply chains required for new home construction.
Q7.What is your outlook on home prices over the next 10 years?
Based upon the current supply and inflation trends, home prices are likely to continue to climb, on average. There will certainly be selected markets where prices fall.
Q8. As you’re building the team at Antares, how is it better than the culture of traditional Big 4 companies?
Antares is focused on delivering the highest value services to its clients, leveraging deep expertise and leading technical capabilities and partners. We maintain objective, independent views that best serve our clients’ interests.
Q9. Which mentor would you like to give a shout out to?
Each of our clients is also a mentor as they each provide unique perspectives from their experiences and knowledge of their industries.
Q10. What services do you clients need urgently? How should they reach out to you ?
Based upon our regular client discussions, most are focused on growth and efficiency and we have structured our services to accelerate the achievement of those goals. We welcome outreach at firstname.lastname@example.org.
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