ABA Banking Journal - August 2008 - (Page 30) COVER STORY Massachusetts’ Chris Dunn, executive vice-president and chief operating officer at South Shore Savings Bank, a $947.6 million-assets thrift headquartered in South Weymouth, near Boston. Dunn says his state has cracked down in force on mortgage brokers. “All of that is weighing heavily on people in that business,” he explains, “and it is forcing some out of the business.” Coupled with improvements in the state’s markets, especially in the Boston metro area, many bank and thrift lenders that Dunn talks to have seen improvements in volume over 2007 levels. He says the market seems to be putting the worst of things behind it faster than other areas, in part because it didn’t develop a deep inventory of new homes that would now be sitting empty. As for his own institution, Dunn says that application volume is up between 15%-20% in the first six months of the year. Dan Dintino, senior vice-president, residential and specialty lending at First Niagara Financial Group, an $8.1 billionassets holding company in Lockport, N.Y., has also seen this effect. “The small independent mortgage brokers and bankers don’t have outlets for products,” Dintino explains, “and the small mortgage bankers don’t have warehouse lines, so they are having to try to broker deals instead.” As a result, in the upstate New York markets it serves, First Niagara has enjoyed a slight uptick in volume. In Chicago, Bill Smigiel at Liberty Bank for Savings says that “with these guys leaving the market, it has created opportunities for us. People are coming to us because we have money.” Some lenders report a development that they haven’t seen for some time: referrals coming from real estate brokers. And lenders report shifts in preferences by borrowers. Take Connecticut’s Liberty Bank. Historically, this savings institution, which has seen a small gain in 2008, was a big biweekly mortgage lender, according to Deb Bochain. “There had been a drop in demand for these when option ARMs were available,” says Bochain. However, as the firms offering those exotic choices have withdrawn, there has been a renewed interest in the money-saving biweeklies. In Michigan, “we’ve seen very little ARM demand, very little balloon demand, just traditional fixed-rate 1530 AUGUST 2008/ABA BANKING JOURNAL and 30-year loans,” says Cynthia Lowman, president, United Bank Mortgage Corp., a wholly-owned subsidiary of United Bank of Michigan, Grand Rapids, $416.7 million-assets. At South Shore Savings’ Dunn says that his organization has historically been a strong hybrid ARM lender, but his market, too, has shown a decided bias towards fixed rates. As rates have begun to tick up, however, he says, the beginnings of new interest in adjustables has been seen. In some markets, banks and savings institutions have seen declines in overall volume, but the potential impact has been cushioned by gains from mortgage brokers. Yet while mortgage brokers and mortgage bankers have taken their lumps, their part of the industry isn’t dead. Pockets appear to remain where the exodus of brokers and some mortgage bankers has not taken place. One example on the West Coast is Seattle. “The broker business is still alive and well,” says Laura Lee Stewart, president and CEO at $270 million-assets Sound Community Bank. Sound Community is a savings institution that resulted from the conversion of a credit union. “We have been holding our volumes up pretty well,” says Stewart. She says that Seattle-area prices have remained firm, so there are loans on the table for all players to go after. Not only lenders on the coasts have enjoyed some market-share growth. Jim Hamby, president and CEO at $475 million-assets Vision Bank, N.A., Ada, Okla., says his bank has seen a pickup. He credits this in part to the perception of community banks as lenders who are in the game for the long-haul. People side of the correction S ometimes lost in the talk about the changes in the mortgage market is the human factor. “The deals are tougher, and when you do put a deal together, it is very tenuous,” says TowneBank Mortgage’s Jacqueline Amato. “The feeling in my office is similar to what it was at the peak of the mortgage market—they’re exhausted. But it’s from a completely different angle. We don’t have as many loans, but we are working much harder, massaging them.” Holding their own, or somewhat Has the exit of the broker fraternity helped Dennis Cardello’s Collinsville Savings Society? The Canton, Conn., savings banker says that “it’s a little hard to tell, because mortgage volume is down so drastically overall.” Cardello says that the $147.3 million-assets thrift has seen referrals from real estate brokers who were favoring nonbank originators during boom times. However, the Society’s overall mortgage volume is 30% of what it was 18 months ago. “So many things are affecting our vol- Displaced mortgage bankers and brokers haven’t fallen on their swords. Some have been hired by banks and thrifts that reaped some of the business that once went to their former employers. EagleBank’s Stephen Greene says “many of them wouldn’t fit into this institution, because they’ve been in the business for four or five years and they think they know it.” However, he says he has found some mortgage brokers who can make the transition. Even while some big players, such as Washington Mutual, pulled out of the mortgage-broker channel, idling some brokers in his region, Greg Rand, managing partner of Connecticut’s Prudential Rand Realty, which is allied with its own mortgage brokerage as well, notes that players that stepped up their activities have been hiring. “People who used to be competing with each other,” says Rand, “are now working together at Wells Fargo.” Subscribe at www.ababj.com http://www.unitedbankofmichigan.com http://www.unitedbankofmichigan.com http://www.sssb.com http://www.unitedbankofmichigan.com http://www.fnfg.com http://www.fnfg.com http://www.soundcb.com http://www.soundcb.com http://www.visionbankok.com http://www.collinsvillesavings.com http://www.collinsvillesavings.com http://www.ababj.com
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