Seattle Mortgage Co., the largest independent mortgage company in Washington state, has made a deal that moves it into the nonconforming market.
The company purchased Bayview Mortgage, a Federal Way, Washington-based brokerage company specializing in lending to borrowers with poor credit or high debt ratios.
Seattle Mortgage's new specialty products division will handle origination and loan production.
The purchase of Bayview "completes the loop" for Seattle Mortgage, said its new specialty products manager, Martin Abraham. "Now, all borrowers' needs - including construction, commercial, conforming and nonconforming (loans) - can be met under one roof."
Mr. Abraham was formerly president of Bayview Mortgage. Terms of the deal, which was completed this month, were not disclosed.
The company will operate out of its Federal Way office. That office will be linked to Seattle Mortgage's seven offices via computer, sharing origination software.
Seattle Mortgage views Bayview as a source of fee-driven income, said Rob Story Jr., vice president of Seattle Mortgage. "Everything is getting squeezed in terms of fees, so we've been looking for ways to increase our revenue," Mr. Story said.
The company is also considering entering the second mortgage market, he said.
Nonconforming loans will be purchased by the more than 40 investors working with Bayview, Mr. Story said. Those investors will also be responsible for the servicing.
"Basically, we're becoming coorespondants of their investors. It's a retail/wholesale situation," Mr. Story added.
Finding a way to originate nonconforming loans in Seattle area is a "hot topic," said Richard Bonnion, executive vice president with Continental Savings Bank in Seattle.
"Here in Seattle, representatives for most of the big nonconforming wholesalers have come by our branch offices," Mr. Bonnion added. Continental Savings refers customers that don't qualify for conventional loans or FHA loans to an outside finance company.
"I think there is a big market for nonconforming loan originations here," he added.
Continental has not yet opted to enter the nonconforming loan market, in part because of the risks it may pose.
Seattle Mortgage has seven offices in Washington state, and one in Alaska.