Agency/GSE jobs outlook- bank vs non bank
Experienced Agency folks- how do you view working at a non bank vs bank for the long term? With what’s happened to Greystone (they can’t be the only one, they are just the first to get exposed, everyone knows non bank UW’s often look the other way a lot more than banks). If you are at a bank doing agency lending, particularly a bank that has a strong agency business and have large balance sheet so there is a steady pipeline of repeat and referral clients for takeout opportunities, seems like a good place to be and ride it out for 20+ years? If you are not in a production role, a good base plus bonus combined with the work life balance makes it seem like a good gig compared to the non banks that can never provide the same base salaries as the banks.
Management at non-banks understand agency lending through and through - its typically the (or at least a) core business for a non-bank whereas banks that do agency lending typically have leadership that do not truly understand the business - just look at the Truist/Grandbridge fiasco.
Disagree that banks offer higher salaries than non-banks. Bonuses are almost always going to be higher at a non-bank as well, but expectations of hours and results is going to be higher as well. At the end of the day its a cyclical business and when things slow down, if you're not a top performer, your job is going to be in jeopardy just as much at a bank or non-bank.
If you're going to make a move, the market perceives talent from non-banks as >>> talent from banks.
Originations at non-banks vs banks is (typically) night and day - originators at bank lenders typically have easier leads and benefit from more captive deals, but comp gets capped fairly quickly. There is typically no cap on originations comp at non-banks, but don't expect the house to ever hand you a deal like you'll get at banks.
Working at a bank is like working for the government. It's nice in a way because the organization typically has a big name and is powerful in the sense that they can write large checks off their balance sheet and will always offer the best pricing, whereas non-banks are much scrappier and more entrepreneurial.
Happy to answer specific ?s
Agree that management at non banks understand the agency lending business. That's their bread and butter. For banks, Agency lending is just one of the businesses (it's very profitable so banks love them) but that being said when you have a bank that is also a top Agency lender (a bank that is always in the top 10 rankings so not Truist, Regions, PNC, etc) will have leadership that wants to maintain its top 10 GSE lender/top bank Agency lender status at all costs. The leadership also gets bonuses, recognition, etc based on how well it's Agency business is doing. The larger point about Greystone (a top Agency shop) is that a non bank due to the very nature of their business model, lack of regulations and oversight and not relying on it's balance sheet a lot just does not understand (who knows whether it's intentional or unintentional) risk as much as the banks (again, I am looking at a top bank Agency lender). When a bank's Agency business also has a balance sheet component and when the Agency business ultimately rolls up to the broader CRE organization which is very balance sheet driven for the most part, there is something to be said about risk and oversight that is really drilled into every part of the org. Just because you have a capital provider like Fannie or Freddie and you have very little risk, does not mean you originate poor quality loans or look the other way (again who knows whether it's intentional or unintentional) when it comes to certain things. We saw this with Meridian (yes I know they are technically a broker and not a shop with an Agency license but they might as well be an Agency shop given their partnership with Newpoint) and now with Greystone.
There is a pattern here and Freddie/Fannie clearly recognize this as well now. This does not mean all non banks are bad but I think it's now clear that more work needs to be done when it comes to making sure i's are dotted and t's are crossed. If a bank was annoying before in terms of asking or needing things from a client, well they need to get used to it, if you want to do business with Fannie or Freddie, even non banks will start to get annoying.
On salaries, keeping origination roles/100% commission based roles aside , comps for non production folks are heavily weighted towards base pay at banks. Base for senior analysts/associates can be as high at $150K+ in just base pay alone at banks (again, I am referring to top bank Agency lenders, afterall they are the ones that do enough volume to justify paying high base salaries). Bonuses can be 20-40% but usually closer to 20%. At non banks, for juniors, base pay is low but with larger bonuses, you can get to close or even beat bank pay. It just depends on one's risk tolerance thresholds, but in today's market, cant beat having a high base pay/guaranteed comp. There is a reason you have seen fewer turnover/layoffs at Agency businesses within large banks when some of the balance sheet teams in the same bank has seen more turnover.
Some good points and yes I agree that credit culture at a bank is going to be more conservative than a non-bank even on the agency front. But there are plenty of smart, conservative senior credit people at the non-banks. Maybe they just weren't tolerated at Greystone. I have no direct knowledge but given their reputation it doesn't seen too unplausible.
I will say that if your goal is a good steady base salary, agency lending might not be for you... its pretty much a lumpy, upside game (like most of CRE)
Just curious, who are “top bank” agency lenders? In 2024 the top 10 Fannie lenders had three banks: Wells (# 7), Key (# 9), and PNC (# 10). Other than that, it’s all nonbank groups, so doesn’t seem like there are enough bank Agency bank lenders overall to delineate between “top” and “non top?”
Out of the loop, what happened with Greystone?
Covered here: https://www.thepromote.com/p/orbach-gotlib-pull-it-off-signature-vet-ge…
Appreciate the link, thanks!
I look forward to the day to hear about any HUD investigations. If you originate, we all have that one deal where you were like "how the F did they get that done?" But if HUD doesn't care then who am I to argue. But wouldn't be surprised to find some gov't people with paid off mortgages or kids graduating college without debt.
CMa a while ago had a good write up explaining it, Greystone was by far the most exposed it seems, teams and staff are leaving. Funniest part another lender had some exposure to Meridian but didn't do as much layoffs, a bunch of people from there left to go to Greystone and now have to find work again.
Seems it was more if the company had Investment sales side and a strong bridge program that didn't all come from brokers they weathered the storm.
I like working at a non-bank Agency (DUS) shop. Granted it’s the only CRE shop I’ve ever worked at, but I feel like we have tons of runway to make credit decisions and do deals compared to a bank, since we don’t have a balance sheet to manage. We have a hefty servicing portfolio (Agency and LifeCo) which provides lots of recurring/predicable revenue. We’ve won business from other shops simply because we can do a loan at Tier 2 (75% / 1.25x), where our competitors can only do the deal at Tier 3 (65% / 1.35x) due to their internal credit teams’ risk tolerance or their existing liability position.
Delete
.
Is there a good resource somewhere that explains fannie's tiers/PR/PD? I can't find it in their guide but I can never really find anything in their guide compared to Fred
Unfortunately no - those documents are considered confidential between the GSE & DUS lender.
In short, Fannie’s three programs are Tier II (80% / 1.25), Tier III (65% / 1.35), & Tier IV (55% / 1.55).Tier II can also mean 65% / 1.25, which prices better than fuller leverage from an LTV perspective.
Freddie’s credit spread pricing operates much more like an a-la-carte menu where you can craft a more tailored leverage point with incremental pricing adjustments.
PD is a bit of a black box, I wish I could tell you more about it. Very high level, every Fannie deal must get Internal credit approval from the DUS lender and then gets sent to Fannie Mae to get formally priced by their trading desk. If a deal requires certain waivers or is located in a “pre review” market, the deal also gets submitted to Fannie Mae’s credit team for an additional round of review and approval before it’s able to be priced. PD simply means that a DUS lender’s credit approval serves as final, delegated approval to get a deal priced. PD authority differs from shop to shop, depending on how well their respective book performs over time.
It goes both ways, while a non bank could have a servicing portfolio (some non banks do, not all) and could rely on investment sales for referral business (though in some years that does not help based on the market), banks especially the top banks have a robust construction and bridge loan business and loan docs for those will have a stip that the bank's agency team will have the 1st rights for the Agency takeout. This often leads to a steady and repeat Agency business. Secondly, if a top bank Agency lender (meaning consistently top 5 or 7 in production volume) wants to remain a top Agency lender, you cannot do tier 3 or tier 4 business when Agency guidelines allow you to do tier 2. Especially with Freddie, there is 0% risk, so bank's internal credit teams understand that and provide a lot more leeway as opposed to balance sheet loans. Cant speak to what some of the other low ranked bank Agency lenders (there are quite a few of them) are doing as do as they do very little volume and may not know the business well. And only one lender can submit the same deal to Fannie or Freddie right? So, there is no way two Agency shops are submitting the same deal with one at tier 2 and one at tier 3. Agencies will tell both the shops to figure out who has the exclusive and get back to them.
Greystone was known to be 1 of 3 lenders that had a large portion of their originations come from Meridian. Up to each person to interpret all the news that’s out there - you can imagine the quality of deals, and how “loose” the underwriting is/was.
There’s also been a mass exodus of top originators. Again, up to the reader to interpret. The promote covered one of the biggest originator teams by Fannie to have left, and there’s more that haven’t made the news yet. Usually, these teams don’t just “leave” without ending up at another shop the next day. So again, read into it what you will.
Some will say it’s cleaning shop, but you could argue, said lender didn’t clean shop until they had to (so they were more or less fine with the type of loans they were originating and how they were underwriting them.
What lenders did you hear, I heard Arbor and Greystone, Cap one got hit hard as well
You’ve raised a solid point. From what I’ve seen, banks do offer long-term stability, stronger compliance, and a more predictable pipeline compared to non-banks, which often carry higher risk despite short-term flexibility. Work-life balance and base salary at banks are hard to match.
While I focus on real estate with Kelt & Co Realty in Dubai, the principle is similar—clients and professionals tend to value consistency and credibility over short-term gains.
I worked in the banking sector and can say that stability is really noticeable here, but non-banking companies often offer more interesting experiences and faster career growth.
Long-term, a solid bank agency platform beats non-banks for stability, comp, and work-life balance.
bumping this thread up with the recent news on Walker. Freddie & Fannie have got to know by now that banks have a better handle on fraud compared to non banks.
What happened with Walker?
Willie discussed it vaguely on their most recent earnings call
Voluptatum iusto reiciendis saepe aspernatur vel blanditiis nobis. Nam recusandae cupiditate illo quia omnis illum. Ratione nulla temporibus atque ut. Officiis nisi velit ratione dolores illum aut consequuntur.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Dolores architecto explicabo delectus aut sunt. Et perferendis illum accusantium culpa voluptas. Molestiae eos enim ad et alias sunt architecto. Unde eum tempore et deleniti nihil aliquid nulla laboriosam. Qui et omnis recusandae molestiae.
Et omnis optio quasi est. Ex enim et et. Nostrum veritatis quod qui dolorem repudiandae dolorum.
Quam praesentium excepturi amet fugit nesciunt quam ex. Praesentium quos dolor id fuga. Exercitationem nihil modi et neque a. Voluptate voluptatibus minus est vel odio. Laudantium numquam consequatur doloremque est sapiente deserunt dolor.
Neque perspiciatis accusantium similique adipisci dolor nesciunt impedit. Et et occaecati ut sint amet. Tenetur repudiandae ipsa fuga ipsa quidem ipsa. Illo natus eveniet necessitatibus repellendus. Labore debitis aut asperiores provident est laboriosam quos.