Arizona-based lender On Q Financial will form a multi-partner mortgage banking joint venture with HomeCo Partners, a consortium of real estate brokerages and a builder, HousingWire has learned. HomeCo Partners had created a JV with New Rez, which is permanently winding down.

The JV, named Partners United Mortgage, has partners consisting of real estate brokerages and builders — including Dilbeck Real Estate in Pasadena, California; Lisa Burridge and Associates in Casper, Wyoming; Rockford Homes in Columbus, Ohio; Weichert ABG in Louisville, Kentucky; Weichert Space Place Huntsville, Alabama; Stark Real Estate in Madison Wisconsin; Weichert Advantage Plus in Knoxville, Tennessee; and Weichert Griffin in Fayetteville, Arkansas.

On Q Financial was originally looking to buy New Rez’s share of a joint venture created with HomeCo Partners, Pat Lamb, CEO of On Q Financial, said in an interview. After the deal fell through due to regulatory filings, HomeCo Partners suggested forming a new JV with On Q Financial.

“This JV actually, because it’s a consortium, allows real estate firms and home builders that don’t quite have enough size to go the full joint venture route to still get into the mortgage side of the business by becoming one of the partners in the JV,” Lamb said.

Unlike a traditional JV model, the consortium model doesn’t require real estate brokerages or builders to make a large upfront investment to start. It also gives the JV a geographical and business model dispersion. 

“If one of our partner’s business slows down for a year, it doesn’t affect the seven other partners, and it doesn’t affect the overall performance of Partners United the same way it would if there was only one partner,” Bob Shield, president of Partners United Mortgage, explained. 

On Q Financial is looking to benefit from servicing its referral partners throughout their lifecycle. The retail channel – which accounts for 85% of the lender’s entire business – is On Q Financial’s bread and butter, and the remaining 15% of production comes from the correspondent and wholesale channel, Lamb noted.

“We are constantly out building relationships with our referral partners, and doing it from initial introduction, where you’re doing a single transaction to try and to grow those relationships to become a preferred lender. Having the ability to do a consortium joint venture like this gives us the ability to grow with our clients,” Lamb said.

About 25 loan officers are expected to join the multi-partner JV with Partners United Mortgage, paying for On Q Financial’s backroom, HR and financial support.

“When the company makes money, they (the eight partners of HomeCo) split based on their percentage of ownership, not their contribution to the business. Maintaining strong compliance is important for On Q, and properly structuring ownership and distributions is critical from a Real Estate Settlement Procedures Act (RESPA) perspective,” Shield noted.

Most recently, On Q Financial brought on former employees from Celebrity Home Loans.

A deal to acquire eight production divisions of Celebrity fell apart due to a mass layoff at Celebrity in February. Afterward, On Q Financial brought over about 20% of what Celebrity was producing after several of Celebrity’s retail businesses transitioned to Luminate Home Loans in December and January, Lamb said.

On Q Financial, which originated $2 billion last year in 46 states, is in acquisitive mode, Lamb added.

“We’re actively looking and in the market to acquire other companies that are deciding that maybe it’s time to leave the business or consolidate,” he said.