Mortgage Banking Magazine

1. T H E M A G A Z I N E O F R E A L E S TAT E F I N A N C E N O V E M B E R 2 0 1 2 MORTGAGEBANKINGRETAIL/WHOLESALE/CORRESPONDENTNOVEMBER2012 INSIDE: Robbins’ New Company Dick Bove’s Straight Talk Setting Up a Correspondent Shop MortgageBanking R E TA I L / W H O L E S A L E / CO R R E S P O N D E N T BIG SHOES TO FILL

2. Robert Cohan opened the Beverly Hills office of Carlyle Financial in June 2012, after spending more than a dozen years as a top producer at several large financial institutions. He saw an opportunity to “fill a hole” in both product and customer service for the high- end market of Los Angeles, says Cohan, the company’s president. Most of Carlyle’s originations are jumbo loans, which is anything above $625,500 in Los Angeles County. Typically borrowers are seeking a seven- to 10-year hybrid adjustable- rate mortgage (ARM), says Cohan. He believes in the mortgage banking business model, and consistently touts his firm’s capabilities to potential cus- tomers. Cohan explains to borrowers that qualifying for a loan at a depository institution just means they’re approved for that bank’s product. “You don’t know if you’re getting the best deal,” he adds. Working as a mortgage banker lets Cohan present more options to consumers. Carlyle also offers enhanced service levels, he says. While banks currently may take 60 to 90 days to close a loan, Carlyle strives to finish the process in 45 days. “There’s so much red tape in banks,” Cohan explains. Delays come from two sources, he notes. Cautious underwrit- ing is deemed necessary to ensure that an institution’s loans match the specific investor “overlay” guidelines it’s working under. Large banks also don’t have enough staff with the authority to approve deals, he contends. Such practices produce a weak customer service experi- ence, he believes. “Retail banks take forever,” Cohan asserts. “No one likes to wait three months and repeatedly send over documents” to satisfy underwriter requests. Most Carlyle clients are referred to the firm, Cohan notes. “Since we’re almost at capacity levels,” he adds, “you have to take care of the people who know you.” Marketing widely would bring in more business than the company could take care of, he says. Having a Beverly Hills office gives Carlyle easy access to the business advisers often used by high-income households. Yet Cohan and his staff, which includes three additional loan officers, also work directly with applicants on common loan issues ranging from credit problems to dealing with unper- mitted improvements on a purchase. Refis rise Refinancing has dominated 2012 originations, according to the Mortgage Bankers Association (MBA). MBA reported in October 2012 that refis then accounted for 83 percent of all residential originations. “Refinance application volume jumped to the highest level in more than three years,” explained Mike Fratantoni, MBA’s vice president of research and economics. Over the last few years, many loan officers have refinanced the same home- owners several times due to falling rates. Yet in this environment, purchase business makes up about half of Carlyle Financial’s originations, Cohan reports. “The purchase market has definitely come back,” he says. “Prices are staying strong,” adds Cohan, particularly on resi- dences priced between $1 million and $1.5 million. California “led the U.S. into the housing boom and bust,” reports Bloomberg. Yet the state “is now leading the way out.” California residential defaults have plummeted by more than half over the last three years, adds Jordan Levine, direc- tor of economic research at Beacon Economics LLC, Los Ange- les. Foreclosure filings have fallen in lockstep, and removing those heavily discounted properties from the market has helped stabilize prices. Real estate sales and prices also have rebounded this year. “Home sales in California’s biggest population centers climbed in August to the highest level since 2006,” states Bloomberg. Purchase activity is causing the number of homes on the market to plunge, according to the California Association of Realtors (CAR), Los Angeles. Inventory rose during the housing bust to more than a 16-month supply of properties for sale, says CAR. Now there’s just a 3.2-month supply of homes on the market, CAR adds. Typically the market is deemed to be balanced when there’s six months of inventory available for purchase. A healthier California job market is supporting the real estate revival. The total number of jobs in the state fell 9 percent during the recession, says Levine. Yet employment has grown 3.6 percent from that low point, he adds. Growth plans Carlyle Financial plans to open a Northern California office in the first quarter of 2013, according to Cohan. Over the past 12 months residential sales advanced more than 13 percent in the San Francisco metropolitan statisti- cal area (MSA) and prices advanced more than 13 percent in San Francisco County, notes Beacon Economics. Statewide home sales will grow slightly next year, Beacon predicts. Yet Carlyle sees opportunities to gain market share because, says Cohan, “I don’t see retail banks improving their customer service.” He explains that lenders “have to build an infrastructure” in their firms to carry out their business vision. Hiring ade- quate staff and training them well are keys to performing effi- ciently in this era of burgeoning regulations and ever-chang- ing loan guidelines. Despite these challenges, Carlyle Financial eagerly antici- pates 2013. “It will be an exciting year,” Cohan says. Howard Schneider is a freelance writer based in Ojai, California. He can be reached at howard@mmnl.net. 80 MORTGAGE BANKING | NOVEMBER 201 2 California Leads Way in Recovery B r o k e r B u s i n e s s By Howard Schneider