Farmers introduced the original cooperative concept in the 18th and 19th centuries to pool resources for economic protection and to leverage their size to get better pricing on supplies. Other cooperative concepts are known to exist as far back as the Greek and Roman empires. While the co-op idea is time-tested and powerful, it is not one that had historically seen a tremendous amount of popularity or adoption in the mortgage industry.
Today, the future of the mortgage industry is far different than it was just three years ago. And with companies looking for ways to maximize revenues, minimize expenses and expand market share, the cooperative business structure is thriving in the form of St. Louis-based Lenders One Mortgage Cooperative.
One definition of a cooperative or co-op, from the Geneva, Switzerland-based International Cooperative Alliance, describes it as a business organization owned and operated by a group of individuals for their mutual benefit. Lenders One was formed in 2000 as a network for mortgage bankers with the goal, both then and now, to leverage the combined strength of companies to provide revenue-enhancing, cost-saving and market-share-expanding opportunities to members.
The founders of Lenders One--Chief Executive Officer Scott Stern, President Tim Stern and Chief Operating Officer Barry Sandweiss--decided to adopt a cooperative business model to negotiate better pricing for members on everything from loan sales to other mortgage-related expenses. This approach has allowed Lenders One to attract a network of mortgage bankers (members) as well as a network of secondary market participants, warehouse lenders, settlement-service providers and other industry participants (partners).
While the notion of a lenders cooperative certainly has resonance in today's difficult business environment where everyone is pinching pennies, it is important to distinguish such an entity from other types of membership organizations. While a cooperative functions first and foremost as a buying collective for similar types of businesses that can pool their buying power for products and services, it is not the same thing as an industry trade group, which serves broader industry goals.
An industry trade association, such as the Mortgage Bankers Association (MBA), pro vides other critical functions such as comprehensive lobbying and advocacy efforts intended to shape public policy on the state and federal level. Trade associations also publish industrywide research and economic analysis that are essential for producing such things as, for example, MBA's National Delinquency Survey and its mortgage finance forecasts. MBA also offers and oversees certain industry designations such as the Certified Mortgage Banker (CMB) or Certified Mortgage Servicer (CMS) designations in addition to holding various conferences open to the entire industry.
Yet under the very large umbrella of the mortgage finance business, there certainly is room for a membership cooperative designed to serve the business operational needs of a certain slice of the industry.
And Lenders One fits this niche nicely. It offers significant benefits to members in addition to increased revenue and decreased expenses: Every member of Lenders One is an owner of the cooperative, meaning each member is a shareholder. So, not only do members receive the benefits of membership, they literally participate in the success of the organization.
"Lenders One has always provided great benefits to mortgage bankers, but the value of those benefits is heightened when the market is as challenging as it is now," says Scott Stern. "Companies are looking for a safe harbor to ride out the storm."
In this marketplace, and in this day and age, the independent mortgage banker's existence is threatened. Lenders One's goal is to protect the midsized mortgage banker and the independent loan origination companies. …