The New Faces of Mortgage Firms Are Often Old Hands
Any day now I expect to see a press release from Charlie Keating saying that he's getting back in the mortgage (S&L) business because, well, what else would someone who's done nothing but manage a financial services company do for a living?
Okay, perhaps Keating is bad example. Two decades ago he ran Lincoln Savings of Irvine (what is it with that city and rogue S&L/mortgage operators anyway?) into the ground, got kicked out and sued by federal regulators, and then went to prison for fraud. He was also a developer, really, not an old line S&L guy. Then again, there's something about banking and mortgages that seem to attract entrepreneurs. It must be deposit insurance and government guarantees on mortgages. When a reporter asked Willy Sutton why he robbed banks his reply was: "Because that's where the money is."
By now you've heard umpteen stories about former mortgage chiefs running loan modification firms, specialty servicers, and/or bottom fishing in the delinquent loan market. What's wrong with that? Nothing, really, as long as said entrepreneur has a clean track record. (Clean, of course, is open to interpretation.) As I once pointed out to a colleague: "What do you think all these laid off mortgage executives are going to do? Go out and sell shoes?"
Stan Kurland, the former president of Countrywide and once considered to be the heir apparent to Angelo Mozilo, is now managing PennyMac, a Pasadena-based specialty servicer/mortgage bottom fisher. This summer PennyMac went public, raising $300 million. Not bad.
At press time an item was breaking over the wires about Jay Kislak, a prominent south Florida banker who has been out of the industry for a while, getting back into the industry by possibly purchasing a failed bank. Jay was also associated with Kislak Mortgage which was sold many moons ago to a non-depository and then swallowed up by a mega bank. Welcome back Jay.
Then there's the case of Claude Arnall. Claude's new company, Mount Olympus Mortgage, is based in (you guessed it) Irvine. For those of you who are newbies to the industry, Claude is the brother of late Ameriquest founder Roland Arnall. His partners at MOM include former senior managers at Deutsche Bank, First NLC, and Washington Mutual.
On its website, MOM, a non-depository mortgage banker, promises to "restore the integrity of our industry by practicing responsible lending." I wish them luck.
I will point out that while Roland Arnall has been tarred and feathered in regard to the nation's mortgage meltdown, Claude has not. He managed an independent mortgage banking firm called Olympus Mortgage, later merged into Argent, Ameriquest's wholesale arm. He left the firm before Ameriquest and Argent collapsed.
Ameriquest and its wholesale unit, Argent, were among the largest A- to D funders during the nation's subprime boom and eventually were the subject of lawsuits and enforcement actions, including a $325 million legal settlement with 49 state attorneys general concerning Ameriquest's lending practices.
Claude Arnall did not return my telephone calls and I doubt he'll be granting many interviews. The Arnalls have always had a reputation for shunning the media, even in trade publications such as this one.
A source familiar with MOM told me that when MOM began operations a few months back "all the main execs were from Olympus Mortgage. They chose the name Mt. Olympus because the company was supposed to be a reincarnation of the old Olympus Mortgage. Even the logos are similar."
Paul Muolo is executive editor of Mortgage Servicing News and National Mortgage News. He can be e-mailed at: Paul.Muolo@Sourcemedia.com