One of the factors noted in a review of Quicken Loans Inc.’s home-loan production process was the role of loan processors — which differs substantially from the industry standard. The company has grown to become one of the largest mortgage lenders and has aggressive plans for further growth.
The Detroit-based lender was assigned an average ranking for its origination process on prime residential loans. Prime production includes jumbo loans.
During the fourth-quarter 2012, Quicken ranked as the third-biggest residential lender in the country with $25 billion in production.
For all of last year, Quicken came in No. 5 with $70 billion in new home loans closed.
Standard & Poor’s Ratings Services, which assigned the mortgage originator review ranking to Quicken, said that the ranking was “based on our opinion of the company’s knowledgeable and experienced management team, thorough underwriting process, strong use of technology, and internal controls.”
Quicken was founded in 1985 as Rock Mortgage by billionaire Dan Gilbert, his brother Gary and Lindsay Gross. The name was changed to Rock Financial Corp. in 1987. It operated as a mortgage bank with around 30 branches until 1999, when it was acquired by Intuit Inc. — the company behind QuickBooks and Quicken software. The lender was renamed Quicken Loans Inc.
In 2002, Gilbert led a group of private investors in the acquisition of the mortgage unit back from Intuit.
Quicken Loans dropped its brick-and-mortar branches in 2008 and originated solely as an online lender. In addition to agency mortgages, it originates prime jumbo mortgages, private-label home loans and reverse mortgages.
In 2010, Quicken Loans Mortgage Services was launched as a correspondent lending division that caters to community banks and credit unions.
Quicken disclosed last month that it had “significantly” moved into mortgage servicing, growing its servicing portfolio to $80 billion by the end of last year.
Among strengths cited by S&P were Quicken’s experienced management team and extensive training programs; centralized and paperless origination process; and use of technology to allow reporting and monitoring in real time, employ hard stops in the origination system and expedite the origination process.
In addition, the ratings agency highlighted Quicken’s requirement that all loans are underwritten twice and the low level of delinquency and losses on its originations since 2009.
But the strengths were offset by limited and mixed performance data on pre-2008 jumbo loans. Data was also limited for jumbo originations since April 2011, when Quicken resumed jumbo lending.
The report also cited potential weakness in Quicken’s internal audit team, which was only formalized last year, and the potentially small sample size for internal audit reviews.
“Quicken Loans has an aggressive growth plan for the near term, which includes strategies for agency, government, and jumbo originations,” S&P said. “Further performance information may result in changes to our quantitative subranking and ranking in future reviews.”
S&PÂ noted that the role of a loan processor at Quicken significantly differs from processors working for other lenders in that processing function is broken up into components separately completed by between 25 and 30 people on each file.
While S&P acknowledged that there are strengths and efficiencies in Quicken’s process, it warned there are also potential weaknesses with the approach because employees are typically trained for one specific task.
