Loans available, but conventional
David Foley sees evidence every day of the upheaval in the home mortgage business.
A senior mortgage loan officer at US Bank Home Mortgage in Indianapolis, he finds himself picking up business from competitors that are no longer around, while battling skepticism about lenders from homebuyers and real estate agents.
"You really do have to spend more time explaining who you are," Foley said from US Bank's office on the Northeastside. "Buyers are asking more questions. They'll look at our closing cost schemes to make sure they're fair. They'll ask about rates. We see a lot of that now."
In the Indianapolis area, the toll from the national credit crisis includes dozens of closed lending offices and hundreds of lost jobs the past two years.
US Bank, whose home office is in Minneapolis, has emerged as a survivor, in part because it didn't push the subprime-rate adjustable loans that were popular from 2002 to 2005 but now have turned into toxic investments because of their high default rates.
"We really didn't want any part of it," said Foley, whose company instead promoted more conventional fare such as FHA- and VA-insured loans and the standard 30-year fixed product.
Foley, 37, who got into the mortgage business in 1999 after six years in banking, said his office is on track to do 15 percent more business this year than last, measured in the dollar value of mortgages issued. The office has 12 loan officers, one more than last year.
"We're gaining market share," Foley said, thanks to the demise of some competitors, including London-based HSBC, which closed last year and laid off 600 employees, and First Magnus Financial, which closed and laid off 20.
But it's hardly business as usual. To keep business coming in, Foley's had to more than double, from 10 to about 25, the number of real estate agents who regularly feed him mortgage business from their home-buying clients. He needs more "referral partners," as he calls them, because agents and home builders are selling fewer homes now than they did during the boom years from 2002 to 2005.
Foley's also putting more effort into marketing and PR to try to burnish the image of his tarnished industry and reassure agents that loan money is still out there.
He tells agents to forget about the once-popular subprime mortgages or no-money-down loans in which the seller funded the down payment. But plenty of loan money is available, he said, in the form of basic fixed-rate and variable-rate mortgages, some with down payments as low as 3 percent of the home price.
Foley also can point to attractive interest rates, ranging this week from about 5.9 percent to 6.3 percent. Other housing slumps faced punishing interest rates, such as one in the early 1980s when rates exceeded 10 percent.
The problem in this housing market is finding buyers who have money for a down payment, decent credit and a willingness to buy, said H. James Litten, president of the residential division at F.C. Tucker Co. Realtors in Indianapolis. That requires optimism, which is hard to come by right now, he said.
Source: http://www.indystar.com/apps/pbcs.dll/
