Veteran mortgage banker John Robbins is planning yet another comeback.
Robbins, who founded two separate mortgage businesses and sold them to big banks before the housing crisis, has launched himself back into the market again. This month he
The housing market is considerably grimmer than it was in 2005, when Robbins sold his last mortgage lender to Wachovia Corp. for $83 million. For one thing, Wachovia no longer exists. Nor does Countrywide, IndyMac, or many other mortgage companies that collapsed during the financial crisis.
But despite that fallout from the crisis and the ongoing housing slump, Robbins says that the current economic climate represents a "tremendous opportunity" for lenders.
"We think that pent-up demand is being frustrated today," Robbins, a former chairman of the Mortgage Bankers Association, told American Banker in an interview this month.
"Ultimately, in what we think of a more normalized real estate market, that pent-up demand will be seen clearly, new home construction will improve, and the market will improve," he says.
Robbins would not say when he expects that normalization to occur, though he expects Bexil American Mortgage to be active in the market by the end of the first quarter of 2012. The San Diego-based company will be a "broad lender" of conforming and jumbo mortgages, Robbins says.
He will run Bexil's executive team as its president and chief executive, and is funding the company along with parent Bexil Corp. He would not disclose further financial arrangements.
Robbins, 64, is
He also founded American Residential Mortgage Corp., which became one of the nation's largest independent mortgage banks before Chase Manhattan Corp. bought it in 1994. (Chase Manhattan is now part of JPMorgan Chase & Co.)
But his latest effort faces
Robbins acknowledges the challenges but proclaims himself "optimistic" about the industry's future.
"The foreclosure issue and the standing inventory issue will slowly improve over the next few years, in allowing a more normalized real estate market to return," he says.
Robbins, who retired from the MBA in 2007, started plotting a comeback in 2008. For some time, he
"It really was a couple of months ago that we started looking at a decision that it was better to do a startup than buy an existing platform," he says.
Foreclosure crisis notwithstanding, he says the real estate market had begun by 2008 to "restore itself," as lenders tightened underwriting requirements and pulled back on riskier loans.
The market "regained its roots, which had always been based on relatively generic product and common sense underwriting," he says, adding that "competition was at a level that started to make sense" as a number of companies were taken over or went out of business.
That consolidation created a window of opportunity, according to Robbins. He estimates that the number of mortgage originators fell to half of what it was in 2003.
"There are a few nationwide lenders but none of the magnitude that we saw during those times," he says.
Starting a new company allows Bexil to avoid so-called "legacy risks" from unprofitable loans made during the housing bubble, according to Robbins.
Even in the case of a second recession, "we just grow slower. The beauty behind this, in not having any legacy loan risk, is that when we start from ground zero every loan represents market share that we've taken, not that we're giving up," he says.
But his latest effort is drawing some skepticism, at least from his potential competitors.
There are "an awful lot of pitfalls out there," says John Walsh, president of Milford, Conn.-based lender Total Mortgage Services, adding that the "barriers to entry" in the mortgage lending field are very high.
"Your margin for error is a lot slimmer than it once was" as housing prices continue to fall, Walsh says, adding that regulatory compliance burdens are ever-changing: "It's like trying to hit a moving target at times."
But Walsh also calls himself optimistic about the housing market overall.
"Housing prices are so far depressed and rates are so great, there could be some pent-up demand out there," he says. "I think that there is an opportunity for the right places…. But there are places that are in existence that are not going to be able to cut it in this regulatory environment."
