Guaranteed Home Mortgage Co. Inc. is making a big push to build a residential mortgage origination platform in the metropolitan New York area’s so-called vertical housing market and has brought on board, among others, former IPI Skyscraper and Wells Fargo executive Neil Bader and his former Wells Fargo colleague Russ Pfeffer.
While the company has more than 300 mortgage professionals lending in 28 states, president and chief executive officer David Wind said the company since its founding in 1992 has always been somewhat “metropolitan New York-centric.” He notes that among other things he once clerked in the New York attorney general’s real estate finance bureau reviewing co-operatives and condominiums.
The company sees opportunity in the New York metro area today in part because of the talent available and Wind believes it could be the pre-eminent firm in the regional business within two years.
As underwriting standards in general have tightened in the wake of the downturn, more complex and often regional co-op/condo markets have gotten particularly challenging to make loans in. As a result, vertical housing loan officers have to specialize in their niche, Wind said. This involves having “understanding and competency” when it comes to understanding “what is and what is not an acceptable building unit” within a particular building. “There’s nothing that’s common about it,” he said. “Each building brings its set of challenges.”
“It’s a game that’s driven by the secondary market” and dependent on investors being willing to buy loans, said Wind, noting that those in the game have to understand those investors’ appetites.
While the company is retail only in terms its channels available for funding loans, it is a nondepository and can and will also broker loans when need be, he said.
In addition to the government and agency market, Wind said secondary market players include proprietary money center banks that have roots in the New York area. These investors may be willing to go beyond some of the government players’ barriers but still draw a hard line in certain areas.
Another category of investors is those that “do not profess to have expertise in the market but understand the collateral.” These players may prefer single deals of high net worth done through a vertically oriented relationship on the banking side of the business.
“A group of investors can enable a building to get to a point acceptable to larger investors,” he noted. Such moves add value not only for borrowers and investor but, for example, Realtors, he said.
“We don’t go to places, we go to people,” Wind said, summing up one aspect of his company’s philosophy.
The company has no profitability mandate; it focuses more on developing relationships, Wind said. He noted that loans in his business typically have thinner margins than traditional transactions but the amounts are larger. Developing the business will take some time as it draws on its financial strength to build infrastructure and sets its sights on the creation of strong customer service capabilities.
“We’ll be patient as we develop our play,” Wind said.
