You Can’t Get A Mortgage At Costco Anymore
Costco may have everything you need for a housewarming party, but as of this week, that can’t help you buy the house. Homebuyers will have to look elsewhere for a mortgage, as the members-only big box store has announced that it is no longer in the business of financing homes.
The retailer recently decided to cease its foray into property finance, starting May 1 – meaning customers will no longer be able to take out mortgages as they feed off free food samples and fill oversized carts with oversized produce.
Since 2020, when the Ohio-based retail lender International mortgage acquired Premier Lending Services — which had an existing partnership with the retail chain — CrossCountry both managed Costco’s mortgage program and was listed among its Costco-approved lenders.
Founded in 2003 by mortgage broker Ron Leonhardt, CrossCountry originated $52 billion in mortgages in 2021, up 22% year-over-year, registering as the nation’s 17th-largest lender , according to Inside Mortgage Financing.
Alicia Gauer, senior vice president of corporate communications for CrossCountry, responded to an email requesting comment by saying, “We do not comment on partner-led programs. We encourage you to contact Costco for this request. »
A Costco spokeswoman responded in an email saying, “Management has no comment at this time” and asked that the response not be attributed to her by name.
Each company has listed minimum information on its website. Costco’s ad simply says, “Members who have questions regarding their current mortgage application and loan should contact the lender they worked with.”
He then lists the lenders he has worked with and provides phone numbers for those companies, including CrossCountry. Other lenders Costco has partnered with include Home loans box, ready.com, Omaha Mortgage Mutual, NASB, NBKC Bank, true genius and Solid mortgage loan.
Upon acquiring First Choice in 2020, Leonhardt, CEO of CrossCountry — which has approximately 3,000 employees and licenses in all 50 states — said the acquisition of First Choice and its deal with Costco was a “tremendous fit.” .
“We are delighted that they have chosen to join us. It enhances both our strategic growth in multiple regions as well as our direct-to-consumer component. Our team engaged and achieved a smooth transition for loan originators and we are seeing immediate success with this transaction,” Leonhardt said at the time.
In a press release also issued at the time, the two companies noted that the Costco program was an important part of the deal.
“There was a thorough review process on both sides to ensure this program would continue with the high level of service required to deliver the exceptional experience that Costco members expect,” said Bill Schneider, vice president. -Executive Chairman of First Choice. “CCM was the company that more than met the requirements.”
News of Costco’s exit may be of interest to another global retailer: walmart.
The big-box store has just announced its partnership with One Cooperative Lenders less than two months ago, an agreement in which Lenders One will lease retail space in Walmart stores from which it will offer mortgage products and services.
In early March, Lenders One announced that it would begin selling purchase, refinance and home equity products at its “store-in-store” branches. It was not immediately clear how many Walmart stores would have Lenders One branches.
In a statement, Justin Demola, president of Lenders One, said the initiative was part of the co-op’s mission to help members “improve their profitability and better compete with larger, well-funded mortgage lenders”.
But Walmart and Lenders One executives will surely follow news of the dissolution of the CrossCountry-Costco partnership. Gauer, the spokeswoman for CrossCountry, did not immediately respond to questions about whether there were any obvious challenges ahead or hard-learned lessons that would benefit Walmart in its efforts.
Costco’s exit from the industry isn’t the first major departure for a mortgage player this year.
Santander Bank announced in February that it would stop issuing residential mortgages and home equity loans in the United States, citing higher rates, lower volumes and stiffer competition, as it had then reported HousingWire.
Santander’s — and now Costco’s — decision on mortgages and home equity is another sign that the mortgage industry’s high-flying days are behind us. Concrete example: The Mortgage Bankers Association said it expects creations to decline 33% year-over-year to $2.59 trillion in 2022.
On the other hand, although CrossCounty’s collaboration with Costco is ending, the company is not shrinking in any way. At the end of April, CrossCountry was set to acquire LendUS, in what appeared to be the first of what analysts and industry veterans believe will be a wave of mergers and acquisitions in 2022.
CrossCountry has made acquisitions over the past two years, and often the target company will operate under the CrossCountry umbrella after the acquisition.
This not only includes Costco in 2020, but mortgage in 2019.
Gauer did not immediately respond to a question about how the broken partnership with Costco fits into his future plans.