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New Penn Financial, a large successful independent mortgage lender, based in the Philadelphia area, announced a joint venture with a Massachusetts Realtor. New Penn will join forces with Jack Conway, Realtor, to create Conway Financial Services.
Conway Financial will operate as a traditional independent mortgage banker, created to provide mortgage financing to Conway’s home buyers and to those seeking to refinance in their market area.
This is not the first such partnership, and most likely won’t be the last. It is yet another marriage of Realtor and Mortgage Lender to create a mortgage lending offspring to hopefully capture financing from one of the partners real estate sales.
These types of arrangements are springing up since CFPB put the kibosh on most MSA’s, which were previously used by some lenders to capture business.
CFPB believes that such arrangements may be a sham to cover the payment of referral fees for business between Realtors and lenders.
So now, these new arrangements come along. Are they what are best for the lender, Realtor, and the consumer? Will the Real Estate agents be pressured to use the new mortgage company?
They can’t be compensated for client referrals. What about the integrity of the transaction when the Real Estate companies primary income is derived from sales commissions, not mortgage financing? Will corners be cut to approve buyers? I sure hope not.
To protect itself, New Penn will likely have a strong quality assurance plan to monitor the activity and loans processed through the new entity, Conway Financial Services.
CFPB may be watching these new relationships very closely. They don’t want to get off on the wrong foot.
It looks as though this may be the wave of the future. Lenders and large Realtors joining forces to create localized mortgage lending companies to capture more of the Realtor’s business.
If done right, both entities may benefit. But, is it best for the consumer and how will this ultimately affect our industry?
