I've diligenced 100 independent mortgage banks. Closed 70-plus. After about deal thirty, the patterns become consistent enough to predict — not perfectly, but well enough that I can usually call which side of the line a platform is on inside the first week of data review.
This is what the data tells you, and what the seller's narrative often doesn't.
Pull-through is the cleanest single signal
Pull-through — the percentage of locked loans that actually fund — is the diligence number I trust most, because it integrates almost everything that matters about an IMB's operations. Loan officer quality. Pricing discipline. Underwriting throughput. Pipeline management. Borrower selection.
Strong IMBs run pull-through in a tight band, typically 78–86%, with stable variance quarter to quarter. Weak IMBs run with the same average — sometimes higher — but with volatility that exposes operating fragility. Quarter to quarter swings of 8–12 points are a tell. The average looks fine on the LinkedIn-grade slide. The variance is what the buyer actually needs to underwrite.
Where the variance comes from is the diagnostic. If it's seasonal, that's manageable. If it's branch-specific, the platform has scattered execution quality. If it's tied to a specific underwriting team or technology change, you're seeing the infrastructure stress without the headline yet.
LO concentration: the top decile rule
Run the production data by individual LO and look at the top decile's share of total volume. In strong IMBs, the top 10% of producers contribute 35–50% of volume. In weak IMBs, the top 10% contribute 60–80%, sometimes more.
The implication is simple: the more concentrated, the more fragile. A platform where eight LOs do half the volume is a platform where eight phone calls from a recruiter could halve the company. The valuation math should reflect that, and so should the integration strategy.
The corollary is the bottom decile rule. In strong IMBs, the bottom 20% of producers still contribute meaningful volume — usually 5–10% of the total. In weak IMBs, the bottom 20% contribute essentially nothing while consuming roughly the same overhead as the top 20%. That's not a producer mix problem. That's a management problem the new owner will inherit.
Branch lifecycle
Most IMBs grew through some combination of organic branch openings and acquisitions. The diligence work is to lay each branch out by vintage — when did it open, when did it stabilize, when did it peak — and then look at where each branch sits today on its individual lifecycle curve.
Strong platforms have branch portfolios distributed across the curve: some branches in their growth phase, some at peak, some declining and being managed actively (either by reinvestment or by closure). The portfolio refreshes itself.
Weak platforms have a different shape. A handful of branches in legacy peak production carrying the platform, a long tail of branches in slow decline that aren't being actively managed, and an empty top of the funnel — no new branches stabilizing into productivity. Volume looks fine in the rearview, but the forward-look is mathematically problematic. The buyer who underwrites the headline volume without understanding the lifecycle distribution is buying decay.
Retention curves on producers
Pull every LO who has hired in the last five years. Plot their retention against tenure. The curve should fall and then flatten — high attrition in the first 12 months as new hires don't take, low attrition thereafter as the producers who stayed have settled in.
Strong IMBs have a steep early drop and a long flat tail at high retention — typically 75–85% of producers past month 24 are still on platform two years later. Weak IMBs have a curve that doesn't flatten. Producers continue leaving at meaningful rates through year three, four, five. Something cultural or economic is pushing them out, and the diligence work is to find out what.
The retention curve is also where the recruiter signal shows up early. Producers don't usually leave because they're unhappy. They leave because someone else made them an offer. If your retention curve is degrading, the local recruiter market knows about your platform before your CFO does.
Recapture: the operating story behind the mark
Every IMB with retained servicing has an MSR mark, and every MSR mark has a recapture assumption embedded in it. The diligence question isn't whether the assumption is reasonable in theory — it's whether the platform's actual recapture history supports it.
Strong platforms can show you, by vintage and product, what their recapture rate has been. They have the data, and the data is consistent with the assumption. Weak platforms either don't have the data (which itself is the answer) or have the data and it doesn't match the assumption (which is the other answer). I have seen sellers carry MSR marks underwritten to recapture rates that the actual platform hadn't achieved in any year of its existence.
If you're a seller: run the comparison on yourself before the buyer does. If your assumption is high, decide whether to fix the operating gap or take the markdown. If you're a buyer: this is where the discount lives.
The cultural tell
The non-financial diligence signal I've come to trust most is how the operating team talks about the producers. In strong IMBs, the operations and capital markets people talk about producers with respect, sometimes with admiration. The producers are the customer; the platform's job is to make them productive.
In weak IMBs, the same conversations have a different temperature. Producers are described as the problem. They're "expensive," "demanding," "always complaining," "never happy." The platform's job, in this telling, is to manage the producers' expectations down to what the platform can deliver.
This is a cultural problem, but it expresses itself economically. Producers in the second kind of platform leave faster, take their books with them, and spread the message in the local recruiter market. The financial diligence will eventually find the result. The cultural diligence — listening to how the operating team talks — finds it earlier.
The market already has an opinion about every IMB. The diligence work is to see what the market is seeing — in the data, in the conversations, in the patterns the seller can't quite hide.
What this means for sellers, and for buyers
For sellers: every signal above is one you can read on yourself, and every one of them is fixable with operating time and discipline. If your pull-through variance is high, you have a sequence of operating problems to work through. If your producer concentration is dangerous, you can dilute it with deliberate hiring. If your branch lifecycle has stalled, you can reopen the top of the funnel. None of this happens in the four months before a process. All of it can happen in the eighteen months before one.
For buyers: these signals are not in the CIM. They are in the data the seller will share if you ask, and in the conversations the seller's operating team will have if you sit with them long enough. The acquirers who win in the IMB space are the ones who do this layer of diligence carefully — and who price what they find, rather than letting the headline numbers carry the model.
The line between strong books and weak books isn't drawn by size. I've seen $300M IMBs that were stronger than $5B platforms. The discriminator is operating discipline, and the operating discipline shows up in the data months before it shows up in the P&L.