Irvine-based mortgage lender Greenlight Financial Services Inc. is set to expand its brand nationally and continue to hire employees under new owner Nationstar Mortgage Holdings Inc.
Greenlight’s management and core operations will remain in Orange County as part of Nationstar’s plans to capitalize on the high brand awareness of Greenlight in California.
Lewisville, Texas-based Nationstar said earlier this month that it’s paying up to $75 million for Greenlight, which is estimated to register a profit of about $62.5 million this year.
The buy is expected to bring on “a new origination channel” and help better position the combined company to “benefit from the improving macroeconomic landscape,” highlighted by rising home prices and fewer defaults, according to Nationstar Executive Vice President Lisa Rogers.
Publicly traded Nationstar operates through its Nationstar Mortgage LLC subsidiary, which is among the largest nonbank mortgage lenders and service providers in the U.S., with about 5,400 employees and $312.48 billion worth of outstanding loans as of March.
Nationstar reported a first-quarter profit of $62.6 million.
It’s aiming to hit about $23 billion in loan originations this year and expects Greenlight “to immediately contribute to Nationstar’s bottom line” by bringing in about $8 billion in originations annually, Rogers said.
Workers
Greenlight has about 750 employees, mostly in Orange County, with about 15 in a San Diego office. It has made hires by the hundreds over the past year and a half, mostly for its reverse-mortgage and wholesale divisions that launched in 2011 and early 2012, respectively. It plans to continue adding workers, a move that’s in line with the goals of the new owner.
“We expect to be about 1,000 by the end of the year, and the majority will be in OC,” said David Norris, who became Greenlight’s chief executive late last year after company founder Joann Pham stepped down from the post. She now serves as chairperson.
Norris was president of Home Loan Center Inc., an online direct-to-consumer mortgage subsidiary of Charlotte, N.C.-based Tree.com Inc. Home Loan Center was sold to Riverwoods, Ill.-based Discover Financial Services last year for $56 million.
Greenlight’s presence in Irvine is pegged to its existing employee base, as well as the availability of local talent, Norris said.
“[Being here] is not cheap, but it’s money well spent,” he said. “This makes a good location for us. … There’s a large pool of educated folks in OC. After the financial meltdown, a lot of regulations were put in place. You have to be knowledgeable not only in mortgage and finance, but you have to be a good test taker, too. We hire either from the pool of folks who are already in the mortgage industry, or we take people from the colleges.
“The housing market does seem to be recovering, especially in OC. I think it will be a solid employment base for a long time.”
Mortgage-lending businesses typically aren’t bound by geographic limits. Many companies are approved to lend in dozens of states, and much of the work can be done remotely via call centers and online.
Greenlight faces locally based competitors—including Stearns Lending Inc. in Santa Ana and Irvine-based Impac Mortgage Holdings Inc.—as well as others in markets across the county.
Local Workforce
Nationstar’s Rogers said the company will count on Greenlight’s workforce here in order to expand nationally in coming years.
“One of the things that we really liked about this opportunity was the management team and their desire to stay on after the closing of the transaction,” she said. “We will need the support of the existing staff, and [we] expect to grow the staff over time.”
The acquisition also brings to Nationstar a widely known consumer brand. Greenlight markets itself using its “you’ve got the green light” jingle on radio and television, a tune that was a product of the marketing firm that Greenlight employed in its beginning years in the early 2000s.
“[The company] has established strong brand awareness and a significant presence in California,” Rogers said. “It has proven mass-marketing experience, [and it] will provide Nationstar with leading expertise in radio, TV and other media.”
Norris said the company currently spends more on advertising for TV and radio, but “the market will push us more online.”
“The market is changing from more of a refinance market to [a] purchase market,” he added. “Those [who are considering] acquiring houses usually go online first. That’s where you’ll see us growing in bulk.”
The shift from refinancing to buying homes is likely to play out more sharply in the second half of this year, according to analysis from the Mortgage Bankers Association, a Washington, D.C.-based organization representing the real-estate finance industry. It has more than 2,400 member companies, including mortgage brokers, insurance companies and commercial banks.
Mortgage Bankers projected about a 24% year-over-year drop in overall mortgage originations to $1.37 trillion this year. The estimated sum includes about $785 billion worth of refinance loans, down from about $1.2 trillion last year.
“A long tail of refis [is likely] through the first half of the year, followed by a rapid drop-off in the second half,” said Jay Brinkmann, the association’s chief economist.
Meanwhile, “modest growth” in the U.S. economy will help boost purchase origination by 16% to $585 billion, Brinkmann said.
Nationstar’s Rogers said the company is looking to profit from macroeconomic trends, as home price appreciation and potential increases in interest rates are expected to slow prepayment and bring more eligible borrowers into the market.
Buys
The company also is open to more buys.
“From a strategic perspective, we are constantly looking for acquisitions that meet our investment parameters,” Rogers said.
Earlier this year, Nationstar paid $1.3 billion to buy from Bank of America the rights to service about 1.3 million residential mortgages worth about $215 billion.
