By most economic measurements, Florida is still in the economic doldrums: more people are moving out than in, foreclosures are still in nosebleed territory and new home building is anemic. So now isn't exactly the best time for a mortgage firm to make inroads there. Or is it?
Tom Wind, the industry veteran who took the helm of J.I. Kislak Mortgage a few months back, said he believes that not only is Florida a good place for lenders to be right now, but "purchase money" loans are the way to go — builder purchase money loans, that is. "The best time to get into a market is when there's blood in the streets," he said in a recent interview with National Mortgage News.
As for concentrating on purchase loans, especially on newly constructed homes, Wind warned that some lenders are making a huge mistake by gorging on refinancings. "It's easy to take advantage of refis," he said. "That market will come to a close," and when it does Wind expects that dozens of mortgage banking firms will fold their tents.
When these lenders fail, Wind said he believes Kislak, of Miami Lakes, Fla., will be there to pick up the slack, hire the best available loan officers from the dying competition and reap the rewards. The firm — which re-entered the business last year after sitting on the sidelines for a good decade or more — is producing just $20 million a month in new originations. Most of that is builder related and comes through the retail channel.
By yearend Kislak hopes to be funding $100 million a month. In time, Wind sees the lender expanding outside of its core market of Florida into other states with the eventual goal of becoming a national retail lender. Kislak Mortgage has a patient parent in the form of the Kislak Organization, a privately held firm with a 100-year history of investing in everything from real estate and financial services to health care.
But is Wind, who headed such megalenders as Chase Home Finance and Aurora Loan Services, too early in Florida? "I think the Florida market is still sinking," said one California-based investor in nonperforming loans. "Investors are making stupid offers on homes and some sellers are taking them just to get the [real estate owned] off their books."
Michael Foote, a loan broker, said he thinks that Wind is probably right at least when it comes to focusing on purchase money loans. "You can't do refis forever and eventually people will start buying homes again," Foote said.
Marc Laird, the chief executive of Cornerstone Mortgage of Houston, said he thinks it may be too early to enter Florida, but his company refilled an application to fund loans there anyway. "Florida is something we're looking at," he said. "At some point it will be a hot spot again. But [Wind] is right about one thing: refis will go away and that's when your LOs need to hit the streets."
Or as Wind put it: "People are still buying homes and builders are still building."
