Mortgages From Crazy To Normal
GRAND RAPIDS — The president of United Bank Mortgage Corp. says the firm dislikes taking aboard additional staff during periods of intense business.
"We don't like to do that," said Cindy Lowman, UBMC president, "because then when things slow down, it means layoffs and we really dislike layoffs."
So, she said, the company's 12 employees took no vacations this past summer — and sometimes it seemed like no weekends or evenings.
"You could describe it that way," she said in response to a Business Journal question about whether the work pace was crazy. "In May, June, July and August, I didn't know you could work that many hours in a day," she said.
Lowman said that with the trough in interest rates during the summer, the mortgage market was a place where everybody was trying to move his or her interest rate to a point below anything they'd ever seen before.
But if interest rates were bottoming out, she said the mortgage company reached a record peak in business this summer.
"For the first time in July we had a $20 million month," she said, "the biggest in the history of the organization.
"We closed about $12 million in August. In September it was down to $9 million and this month will be $6 million to $7 million."
She said UBMC is staffed to do $7 million to $10 million in mortgages a month.
"I was very careful," she said. "I didn't want to get a bunch of staff that we'd have to lay off. Banks just historically don't lay people off. So we did a $20 million month with existing staff.
"They were working way beyond normal hours and doing it willingly," she said. "The only thing we didn't get in was vacation. I don't think anybody took one. Everybody contributed 150 percent and now it's back to normal.
"Today we still have great interest rates," she said. "The difference in rates is less than half a percent, and historically that's still pretty low
"But that 30-year, five and three-quarters percent money is not available any more. So people who are getting on board today are those who didn't get on board in May, June, July or August. Thirty-year money today is six and a quarter percent."
Lowman said, too, that the nature of the mortgage market has undergone a subtle change since September.
"It's just not a refi (refinancing) market any more," she said.
She explained that more of the firm's business today is to finance home construction and home purchases. "Much more of it is for construction and purchase now," she said.
"Now, why didn't we have a ton of purchase money in May through August? I think it's because the economy was driving people into a safe harbor, saying, 'I don't want to make that kind of move (to buy or build) right now.'
"So now — today — there's a little more confidence in the economy and we're seeing the construction and buying markets burst open a little bit.
"I wouldn't say the flood gates are open, but we're seeing a good buyer's market out there. There are good interest rates and there are a lot of houses to look at."
She said that in September UBMC still was fairly busy.
"But now we're back to more of a normal pace — a fairly good, normal pace. I think we'll close about one-half the business this month that we closed in September.
"Now, is one-half that amount of business bad? No, I'd say it's probably a little bit more normal."
Adding to the demands on her staff's energy during the summer, Lowman said, was another year's growth in the amount of paperwork.
"We kill a lot of trees in our industry," she said, indicating her impression that a completed mortgage document today probably averages two inches thick.
"We do a post-closing survey," she added, "just to find out how the consumers think we're doing for them, and one of them complained about the number of documents he had to sign.
"Well, I responded back, 'I would love to have fewer documents, but you need to contact your legislators, because that's where it's coming from.'
"They've added more this year," Lowman continued, "with new forms for customer information privacy. It creates more documents.
"There's no education about this for the consumer," she added. "We're the ones who have the onus of explaining it to the customer."
She contrasted UBMC with other mortgage lenders by saying the firm does not sell mortgage or mortgage services to other entities.
"Sometimes escrow accounts get sold to another entity," she said.
"And we've seen it happen where they were sold twice in the same year. In one case, a customer told me he ended up with a 30-day delinquency because the tax office sent the papers to somebody who no longer serviced the mortgage.
"The entity sent it back to the tax office who, in turn, bounced it back and had to look for the new company. Meanwhile, the household got the delinquency notice."
Bowman said some firms have gone more into the servicing part of the industry.
"If I were to close loans and sell my servicing," she said, "then I would get paid as the originator. And they'd pay me a quarter point to buy my servicing.
"Now, if I wanted to generate some quick revenue, I'd sell off a portfolio with a quarter percent servicing paid to me and it's a nice chunk of change.
"But we feel, especially as a community bank — a privately held community bank — that we want our customers to remain our customer."