Local mortgage company takes advantage of slump
By MAYA RAO Staff Writer, 609-272-7221
(Published: October 14, 2007) LINWOOD - The branch manager of EquiHome Mortgage in Southampton, Pa., found himself out of work when the company said it was ceasing operations immediately.
Stephen Phares had already been in talks with Ivy League Mortgage about his office becoming a branch of the Linwood-based company, according to Ivy League Mortgage CEO Steven Brasslett. But they went into emergency mode, and Brasslett signed up Phares over the weekend, took care of the millions of dollars in his branch's loan pipeline and had Phares in business Monday - under Ivy League Mortgage's umbrella.
Mortgage lenders big and small are folding, dumping thousands of loan officers onto the job market. This year, investors' once voracious appetite for nontraditional, risky loans cooled and the days of easy credit ended.
Brasslett's company has struggled, too. But he sees the survival and future of his company - which originates, underwrites and closes home loans - in adding branches.
"It's a hell of a time for the mortgage industry," Brasslett said.
He said he is signing on four branches across the East Coast. The branch system allows Ivy League Mortgage to expand by adding mortgage bankers or brokers that already have a building, employees and clients. That saves Ivy League Mortgage money on capital investment and overhead, gives it a cut of the profits and provides the entity signing on as a branch with more loan products and other resources.
Mortgage companies fund loans through wholesale lines of credit. When those wholesale lenders started asking for more collateral as the housing market deteriorated, some companies found they could not meet the requirements. As lenders pulled loan products, and tightened employment and asset requirements for prospective homebuyers, some small mortgage companies and brokers pared staffs and struggled to survive.
Small companies are eager for a bigger company's assistance in meeting the higher requirements. Ivy League Mortgage woos them with its pluses: It's affiliated with federally chartered American Home Bank, giving it a license in 50 states, and it can give them access to expensive customized mortgage and marketing software.
"It's been a tough two years, it really has, and we could have kept going the way that we were and probably been worse off today than most. The market has helped more so than we ever imagined to attract talent for us," Brasslett said.
Ivy League Mortgage, which started as a three-person shop in 1997, first tried to expand through satellite offices, or locations opened and operated with existing company resources. It eventually opened seven in places including Ocean City and Vineland, but they became too unwieldy.
In 2005, Ivy League Mortgage moved into new corporate headquarters in the Cornerstone Commerce Center in Linwood, where it has 35 employees. As it was re-evaluating its expansion plans, this year's mortgage crisis hit.
This year, the company signed on the branch in Southampton and another in Upper Township; other deals in the works are in Boca Raton and Tampa, Fla.; Salem, Mass.; and Rocky Hill, Conn.
In a grim acknowledgement of the state of the industry, Brasslett's company uses the online Mortgage Lender Implode-o-Meter to recruit for its programs. The Web site - http://ml-implode.com - says 161 mortgage companies have closed since late 2006. Brasslett goes right to the site's list of "ailing lenders."
When American Home Mortgage Investment Corp. was rumored to be tanking - it filed for bankruptcy in August - Brasslett had employees send e-mails inviting their loan officers in New Jersey and Pennsylvania to associate with Ivy League Mortgage through its partners program, which allows loan officers to work from remote locations. He tries to persuade such prospects that they would have a greater cut of the profits and more stability.
It's a sharp reversal from the industry's job climate a few years ago.
"If you tried to hire somebody in 2003, 2005, you had to pay top dollar and it was hard to find (someone) because everybody was doing such a large volume of business," said Joseph Heisler, president of the New Jersey Association of Mortgage Brokers.
Brasslett said there are limited opportunities to expand in New Jersey - after all, there are only so many mortgages you can sell. And the overall market has shrunk because the housing market is sluggish and the number of people eligible for nontraditional mortgages has fallen.
"I think with any downward-trending market, no matter what industry you're in, there are opportunities," Brasslett said. "We're going to look at today six months from now and say, 'That was the time.'"