Title: Banker, Broker, Insurer: Committed to Mortgage Financing, TowneBank Decides That the Key to Future Success Is Having an "Inside Track"-Owning a Real Estate Broker
Abstract: To many bankers, real estate brokerage and management powers haven't been anything to get terribly excited about. Sometimes, the yawns have been deafening. Even though the national real estate brokerage lobby reneged on negotiations that helped clear the way for the Gramm-Leach-Bliley Act, and has supported the ongoing holdup of brokerage power that might have been granted under that law ever since, comparatively few banks have risen up to join the fight to make the promise of this power a reality. They simply don't see a stake in the fight. In recent months, however, some community banks have started to realize that while they sat on the sidelines of this ongoing battle, the bigger war around them was changing. They didn't want brokerage power per se, but many community banks have ventured further into residential mortgage lending. And while the refinancing market was hot, many had all the volume they could wish for. But with that market intermittently cooling off--perhaps for a long while if long-term bond rates start rising--bank mortgage lenders have come to an uncomfortable realization. Which is that with all the attention focused on refinancing, the purchase mortgage market was somewhat quietly undergoing a revolution. Filled-up dance cards Purchase mortgage lending has long been a business of relationships--originators had to cultivate the gatekeepers of the real estate business--real estate brokers, real estate attorneys, builders, and others--to obtain the leads that would later turn into mortgage loans. But, increasingly, bank mortgage lenders have found that companies that once represented potential partners have morphed into competitors-and, for that matter, competitors with a built-in advantage. An increasing number of real estate brokers and builders have set up lending arms. Rather than simply wearing one hat, they see the advantage of continuing their customer relationship beyond their traditional role. And more and more community bankers, speaking at industry meetings and privately, see themselves being cut out. One such player is TowneBank, a $1.5 billion-assets bank based in Portsmouth, Va. TowneBank, just six years old, has been building an expanding base of business in its state, and has been acquiring not only additional banking operations but also acquiring or establishing nonbank fee-based businesses. One such business is mortgage banking. We are not a refinance shop, explains Morgan Davis, president and CEO of Towne Financial Services Group, which includes all of the bank's nonbank entities, including mortgage banking, insurance sales and brokerage, real estate settlement services, commercial mortgage banking, investment services, and more. Davis explains that Towne's refinancing activity has represented a bit less than one-quarter of its residential mortgage volume this year and last, and that is by design. Refinancings, though very appealing in the short term, tend to be a distraction from the business of purchase financing, Davis says. Resources tend to be pulled toward the refi borrowers' needs and maintenance of relationships with real estate brokers and others can suffer. Lenders who take their eye off these folks may neglect them, and they are a market with an elephant's memory, says Davis. But even with these good intentions, Davis says TowneBank realized things were changing. The availability of mortgage opportunities was shrinking, says Davis. This was a direct result of the trend towards nonbank players to adopt their own financing operations. And when a $1.5 billion bank has built up an home-lending operation boasting annual volume of more than $500 million, this is devastating news. And especially so in TowneBank's markets, mostly along the Virginia coast. We are in a seller's market, says Davis. Homes selling in the bank's area are at a premium. …
Publication Year: 2005
Publication Date: 2005-07-01
Language: en
Type: article
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Cited By Count: 2
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