Gone are the days of back-and-forth emails, notifications, PDFs, prospective loans and trailing documents to sell or invest in a non-agency loan, thanks to Eloise Schmitz, CEO and co-founder of LoanNEX and a recipient of the MBA NewsLink 2022 Tech All-Star Award.
LoanNEX connects a network of 6,000 originators with non-QM, Prime Jumbo, and agency products. With a total of 32 Correspondent and Wholesale lenders on the platform, LoanNEX is currently delivering pricing on 16,000 loan scenarios a month, a number that continues to rise. Those loan scenarios account for more than $11 billion in non-QM loan volume.
At just $40 a month for an individual seat, the technology provides one of the highest ROIs in the industry, says the company.
Prior to founding LoanNEX, Schmitz had more than 26 years’ experience in corporate finance, including 12 years with Charter Communications, where she served as SVP of Finance and Strategy and CFO. Before that, Schmitz had a successful banking career in corporate and commercial banking with US Bank in St. Louis and Wells Fargo in Charlotte. During her banking career, Schmitz worked on creating asset-backed securities for large ticket medical equipment and computer leases similar to mortgage-backed securities financing vehicles.
Timing is Everything
Having watched the steep correction of the mortgage market in 2008, and the corresponding shift in the market reliance on agency products which was further reflected in the orientation of pricing and eligibility, Schmitz felt the time was right for technologies to support the origination and buying/selling of non-agency loans.
When Schmitz left Charter Communications in 2010, she was approached by Ken Niemann, who she’d known since 7th grade. Niemann is one of the nation’s most prolific residential mortgage originators, with experience in secondary marketing, underwriting, regulatory compliance and process management. Together, they envisioned a technology platform to improve how non-agency products were being accessed and how the resulting loans are transacted from originators to investors. They founded LoanNEX to do just that.
“From our perspective, the first problem to be solved was to give non-agency investors a distribution platform to expand product visibility in a predominantly agency market,” Schmitz said. “Having access to technology is great, but can also be limiting if the technology has limited product access and therefore limits the loan officer’s ability to ensure their borrower is matched to the right product.”
Its interactive platform, Broker Marketplace, augments the existing technology stack on the origination side and is fully customizable, supporting an unlimited number of attributes and requirements and accommodating all loan types and conditions. “We have added two-way communication to our marketplace tools, giving originators the ability to discover, collaborate and transact, all from a single platform,” she said.
Ultimately, Broker Marketplace opens up more opportunities for homebuyers who would otherwise be left out. “With more capital coming into the market the credit box is opening up,” she said. “But if a loan officer doesn’t know about a product, he certainly can’t sell it. Broker Marketplace flags that opportunity for originators to offer the homebuyer.”
Transitioning Market
The platform debuted in 2016 and gained a fair amount of traction from its booth at MBA Annual that same year. Growth continued until COVID-19 caused a widespread shutdown in first quarter 2020. “Business came to a virtual standstill, resulting from the unprecedented rate changes, that essentially caused the non-agency market and our customer base to disappear overnight,” Schmitz said.
But you can’t keep a good woman down.
Looking back, that was a big turning point for the company, she says, and one she is particularly proud of. The team worked to add more robust features to the platform, and provide more access and integration points, including its ICE integration and expanded APIs. The goal was to be ready to provide clients with the resources they would need to compete and thrive as non-agency loan volume came back, she says. At the same time, Schmitz was listening carefully to the feedback from customers and her team and growing the senior leadership team, which includes several women.
By late 2021, her patience paid off. As the market came back, LoanNEX quickly gained ground. “In a rising rate, predominately purchase market, marketplace access to more products with smart interactive tools is particularly critical as is the ability to serve more borrower types,” she said. “Our technology gives loan officers a great degree of confidence that they are considering all of the requirements for that loan to successfully close.”
In just the past 12 months, volume on the platform has increased nearly 15-fold, she says, and the company has positioned itself as the Non-QM content distribution platform. “Clients put their content on our platform, and we make it accessible in as many places as we can. The next phase is putting LoanNEX inside the primary LOSs, enabling LoanNEX to be utilized as an enterprise solution with specialized solution tools,” she said.
The company launched its TPO Connect integration and plans full Encompass integration for retail originators later this year. “Technology needs to keep pace with a changing market, and cannot remain stagnant,” Schmitz said. “We are positioning ourselves to serve emerging opportunities, such as the growth in demand relating to investment properties, short-term rental properties and more. We arm loan officers with tools to instill the confidence needed in the products they are selling and recommending to their borrowers represent the best options for their borrower and can be delivered.”
Listening and Leading
Schmitz, who holds a Bachelor of Science in Management with a major in Finance from Tulane University, leads a carefully assembled team of professionals to continually update and make enhancements to the LoanNEX platform. Her colleagues describe her as a global thinker with the ability to view the big picture and understand market trends from both short-term and long-term perspectives. She evaluates business opportunities from an immediate revenue standpoint and ensures those opportunities align with the larger mission and end vision for LoanNEX.
“Coming from outside of this industry, I’ve had a front row seat to seeing some amazing entrepreneurial leaders – and some who were not as good,” Schmitz said. “Both kinds of leaders teach you lessons.”
Schmitz credits a credit executive at a regional bank where she worked for helping her learn about good leadership. “He was not an obvious role model, but he taught me important lessons on how to guide people by being constructive but firm and to listen first and opine second,” she said. “One of the most important things I’ve learned is that no one comes up with the best answers or decisions all on their own. You need to surround yourself with a great team and then listen and understand what you’re hearing, and then implement it. To me, that’s what good leadership is all about. You have to be able to listen and then decipher what does that actually mean to the stakeholders, clients, and customers.
“That was a great lesson I learned along the way and that’s been the case here at LoanNEX: We have a great team, we all push each other forward, and we know we have to continually listen to carve out new products and new services that don’t exist in the space.”
Schmitz notes the small agile team interacts with customers every day. “That’s been the best way for us to understand what’s needed and move in the right directions,” she says.
Through the success of LoanNEX, Schmitz is inspiring others with her story. “Good leadership is not dependent on gender,” she says. “Being a good leader means not being afraid to listen and change. In a small company you want to give your team the opportunity to learn, listen and succeed.”
It’s All About Timing
The LoanNEX story is an impressive one about having the right idea for the time – and then waiting for the right time again for your idea.
“We were on a really good stride up until that first quarter of 2020,” Schmitz said. “When the world shut down for us, that was a critical time – probably the most challenging time of my career. I continually asked myself ‘What do we do now? How do we keep the team motivated? How do we make sure we’re going to be relevant?’ I had absolute faith the need for our platform wasn’t gone; it was just on pause. I’m proud we came out the other side more resilient, with the team intact, the opportunities bigger, our reputation stronger.”
As an industry, and especially just following the observance of International Women’s Month, we are grateful to visionaries like Schmitz who not only hold fast to their dreams, but pull others up with them as well.
Click the link to read more: MBA NewsLink 2022 Tech All-Star: Eloise Schmitz of LoanNEX – MBA Newslink
