By Carole Hawkins, [email protected]
The mortgage meltdown saw banks pull back on home lending. And ever since Dodd-Frank regulations hit, real estate has been abuzz over how tightened lending standards have slowed housing’s recovery.
But in Jacksonville’s metro area, a handful of new lenders are looking to compete for buyers’ home-loan business.
Five new mortgage companies came on the scene in rapid-fire succession starting in October.
Is it because of Florida’s resurgent housing market?
Niche products or better services that organically led to growth?
A sign of national mortgage companies’ great connections to local talent?
The new companies say yes to all of the above.
But another reason — a common thread that ties them together — each is a non-bank lender. And Jacksonville isn’t the only place where it’s happening.
In 2008, banks originated 72 percent of the nation’s home loans by dollar volume, according to information provided by the Mortgage Bankers Association from the Home Mortgage Disclosure Act database.
By 2013, the banks’ market share had dropped to 59 percent.
Over the same period, the independent mortgage companies grew their share by an equal percentage, going from 23 percent to 36 percent.
Marina Walsh, MBA vice president of industry analysis, said the shift is a fundamental one and not simply part of the natural ebb and flow of market demand for mortgages.
“A lot of the large banks have been trying to determine how big of a presence they want in mortgage,” she said. “As banks have retrenched, the non-banks have stepped in and filled the void.”
Banks especially pulled back from buying mortgages on the wholesale market, Walsh said. That means picking up loans originated by other lenders, known as correspondents.
When that happened, many of those correspondents got licensed to sell their loans to Fannie Mae, Freddie Mac and Ginny Mae.
It’s a point the non-bank lenders make in their marketing. Selling directly to the federal agencies means loans meet all of the federal requirements for minimizing loan risk, but don’t include other requirements, called overlays, that many banks additionally impose.
Non-bank lender iMortage, for example, says direct lending equals more opportunity for consumers to qualify for a mortgage.
“The banks have chosen a more conservative approach to lending practices,” said Brad King, a loan consultant for the company in Jacksonville. “It reduces the number of people they lend to and it allows competitors to enter the market.”
At the same time banks were re-thinking their role in the mortgage market, many non-bank lenders were poised to meet the needs of the moment, said Walsh.
Large lenders like Nationstar and Green Tree, for example, already had policies in place which would become part of the new national standards, such as having a single point of contact for consumers.
Non-bank lenders say, since mortgage lending is all they do, mortgage customers get better, more personalized service.
“It’s easier access and a warmer response,” said King. “Banks traditionally use mortgages as a tool to cross-sell other banking products, checking, savings and money market accounts.”
Walsh, though, said it’s over-generalizing to say non-bank lenders have a better business model for selling mortgages.
“Non-bank lenders are very good at reaching the purchase market and first-time homebuyers, and in general they tend to have a more nimble structure,” she said. “But you can find a bank that is very successful in the mortgage business too.”
With housing in a rebound nationwide and banks still smarting from mortgage crisis fallout, non-bank lenders are taking up slack in the market. Five new non-bank mortgage lenders have opened in the Jacksonville area since October.
Movement Mortgage
10151 Deerwood Park Boulevard, Jacksonville
Branch Manager: Julie Koren
Corporate headquarters: Charlotte, NC, since 2008.
What’s special about the company: A seven business day credit clear-to-close process makes this company attractive when mortgage loans need to close quickly. In some cases the process is faster than the time it takes for consumers to find a home, Koren said, essentially making the consumer a cash buyer, as long as the home appraisal is in line with the sale price.
iMortgage
3652 3rd St. S, Jacksonville Beach
Branch Manager: Rick Brown
Corporate headquarters: Scottsdale, Ariz., since 1999.
What’s special about the company: Is a direct Fannie Mae, Freddie Mac, FHA lender, which makes loan qualification simpler. By contrast, many banks will overlay their own set of requirements on top of federal requirements, as per investors’ guidelines. iMortgage also has access to non-QM loans.
Highlands Residential Mortgage
8641 Baypine Road, Jacksonville
Branch Manager: Jim DelVecchio
Corporate headquarters: Dallas, TX, since 1992
What’s special about the company: Experienced loan officers drawn from local talent. In addition to traditional products, Highlands offers condo financing, including non-warrantable condo loans.
Starkey Mortgage
4651 Salisbury Rd., Jacksonville
Branch Manager: Brenda Williamson
Corporate headquarters: Plano, TX, since 2000
What’s special about the company: Starkey is a correspondent lender, a privately held company that finances loans with its own money. As a direct Fannie Mae, Freddie Mac lender, Starkey may either hold the loan or sell it to a larger mortgage lender. The company can close quickly, as fast as eight days.
Reverse Mortgage Funding
1369 Pinewood Road, Jacksonville Beach
Branch Manager: Marshall Gallop
Corporate headquarters: Bloomfield, NJ, since 2013
What’s special about the company: Specializes in reverse mortgages and also reverse purchase mortgages, a type of loan where borrowers 62 and older pay 50 percent cash towards the cost of a house and make no mortgage payments for as long as they live there. RMF is financed by a real estate investment trust and does not sell its mortgages.