Business Monday

Network Capital Funding expands home mortgage market from Miami

Tri Nguyen, CEO of Network Capital Funding Corporation, a California-based private mortgage lender that has opened a big center in Miami to train millennials in finance for the company, at his office near Miami International Airport.
Tri Nguyen, CEO of Network Capital Funding Corporation, a California-based private mortgage lender that has opened a big center in Miami to train millennials in finance for the company, at his office near Miami International Airport. cjuste@miamiherald.com

The company: Network Capital Funding Corp. is a privately owned, non-bank financial institution that specializes in making mortgage loans directly to customers for purchasing new or used homes, refinancing existing mortgages, consolidating debts and home improvement.

Founded in California in 2002, it was one of the few direct home lenders to survive the 2008 financial crisis and now operates in 25 states. Network is based in Irvine, California, and opened its East Coast headquarters and training center in Miami last year.

Spurred by low interest rates, Network has experienced rapid growth. For example, its revenues rose from $10.2 million in 2010 to almost $39.9 million last year. The Miami office currently has 133 employees and the company expects to reach about 250 by October 2016.

“We offer our clients speed, pricing and customer-centric service,” said Tri Nguyen, the founder and CEO of Network Capital. “But we are very careful about evaluating a client’s ability to repay.”

“Network does not charge lender fees, we have the most competitive rates available and we make the process as easy as possible for our clients,” Nguyen said. Lender fees, often charged to process mortgage loans, may include application, origination, lock-in, processing or underwriting charges.

The firm opened the Miami office to expand its market reach and its access to qualified job seekers. “There is a lot of untapped talent in South Florida,” said Nguyen, who lives in Miami three weeks out of each month and travels to California for the remaining week.

“Many college students graduate to no jobs. We are hiring and training about 25 new employees every three weeks in Miami.”

Clients apply for loans online or by phone and work directly with a mortgage loan specialist. The company uses advanced technology to process loan paperwork quickly and efficiently, sometimes in ten business days, depending on the type of loan.

Loan officers are trained to educate consumers, explain each step in the complicated loan process and resolve any customer concerns.

“We train our employees so that every client enjoys the best quality service,” Nguyen said.

Network in 2015 approved 5,123 loans totaling more than $1.2 billion. The company sells most of its loans to investors, recycling the money it receives from these sales so it can continue to fund new mortgages.

Last year, the Miami operations generated about 17 percent of the company’s business. So far in 2016, Miami accounted for about 36 percent.

The company is highly regulated by state and federal governments and mortgage bankers must pass a Nationwide Mortgage Licensing System test.

Products: Five-year to 30-year loans, including fixed rate and fixed/ARM (adjustable rate mortgage). The average loan approved in 2015 was more than $234,000. Network offers conventional loans as well as Federal Housing Administration and VA Veterans Affairs loans. “We make sure our clients get the right loan to suit their needs and income,” Nguyen said.

Getting started: Nguyen, who learned the business working as a mortgage broker in California, started the company with his personal savings and four friends. He grew the business by reinvesting profits, offering attractive rates and service and advertising. For example, Network sponsors radio shows where experts offer news and advice on the mortgage market in 11 large cities, including Miami and West Palm Beach.

The difference: Unlike major banks in the United States, Network can offer lower rates because it does not support a large branch network or tens of thousands of employees. It compares rates available on the market and, “We offer just a little bit better,” Nguyen said. His approach is to grow revenues by increasing loan volume through more competitive rates.

Customer service is critical. “Everyone gets complaints,” he said. “But like Nordstrom and Costco, we do everything we can to resolve them.”

Revenue: Nearly $39.9 million in 2015, up from $23.4 million in 2014. Net profits for 2015 were more than $5.2 million, compared to nearly $1.8 million in 2014.

The company said it has no bad loans, that is, loans with interest unpaid for 90 days or more, due to its rigorous review of applicants. One Network loan guaranteed by the FHA was temporarily in arrears, but subsequently was brought up to date.

Competitors: Quicken Loans, loanDepot and other non-bank mortgage lenders, as well as giant banks like Wells Fargo, Chase and Bank of America.

What customers say: Elizabeth Roque, a Realtor in Pembroke Pines, applied by phone for a loan to consolidate debts on her town house and a time share. “It took three days to process my application, two weeks to get approval and the paperwork was done,” Roque said. “I was really impressed. Their turnaround time was amazing and I saved a lot on the interest rate.”

In Orlando, José Ríos, a truck mechanic, applied for a loan online to refinance his family’s home. “I’ve worked with other mortgage companies, but I didn’t like the service,” he said. “They [Network] approved my loan earlier this year in less than a month. The service was really good … 100 percent.”

External views: A financial expert commenting on changes in the U.S. home mortgage market said that the role of non-bank financial institutions — like Network — is increasing in the residential mortgage market as commercial banks withdraw. “Today, more home loans are made by non-banks than banks,” said Christopher Whalen, senior managing director at the Kroll Bond Rating Agency in an article published by National Mortgage News. “As the commercial banks retreat from the many markets that banks entered in the 1990s and 2000s, non-banks are going to take up the slack and grow into many areas of consumer finance.”

Earlier this year, Network was named to Inc. Magazine’s list of the fastest-growing U.S. companies in revenue over a five-year period. “In an incredibly competitive business landscape, it takes something extraordinary to take your company to the top,” Eric Schurenberg, Inc.’s president and CEO, said in a news release announcing the winning companies. “Business owners don’t achieve that success by accident.”

The Better Business Bureau of Orange County, California, assigned an A+ rating to Network, on a scale of A+ to F.

Challenges: “To continue growing, we need to stick to our principles and not follow everyone else,” Nguyen said. “Providing new mortgages helps everyone. Our business model is good for the consumer, for the employees, for the community and for the company.”

Outlook: Interest rates are expected to be low for the next couple of years and the company expects at least 60 percent growth in total loan volume this year.

The writer can be reached at josephmannjr@gmail.com

Network Capital Funding Corp.

Business: Network Capital Funding is a direct home loan lender serving clients in 25 states from its main office in California and its East Coast loan and recruiting center in Miami. Clients seeking loans for new and used homes, as well as refinancing and debt consolidation, apply online and work with a dedicated mortgage specialist. The firm’s use of advanced technology and online service allow for rapid decisions on loans and lower rates than major banks and other financial institutions that operate large branch networks. Last year, Network Capital approved 5,123 loans for an average amount of more then $234,000 each.

Founded: 2002; Miami office opened in 2015.

Founder and CEO: Tri Nguyen.

Corporate headquarters: Irvine, California.

East Coast headquarters: 1000 NW 57th Court, Miami.

Employees: 133 in Miami out of more than 525 company wide.

Ownership: Tri Nguyen.

Website: www.networkcapital.net

Source: Network Capital Funding Corp.

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