Low Rates Keep Lenders Hustling

Fayetteville-chartered Arvest Bank maintained its status as the area’s top mortgage lender in 2009, closing more than 6,400 loans.

And despite a 5 percent dip from 2008 in its total number of loans closed, Arvest enjoyed a 4.1 percent spike in their overall value in Benton and Washington counties. After closing loans totaling more than $1.12 billion in the two-county area in 2008, Arvest closed more than $1.16 billion in 2009.

Todd White, senior vice president loan production manager, said Arvest’s results were even better when examined on a company-wide basis. The bank also serves the Little Rock and Fort Smith markets, as well as parts of Oklahoma and Kansas, and as of this year, Missouri.

“It was the best year we’ve ever had,” White said, “and 2010 will be close behind.”

While several others among Northwest Arkansas’ leading mortgage lenders shared that sentiment, others struggled through a 2009 that saw positives like the first-time homebuyers tax credit offset by challenges such as tighter lending standards. That’s perhaps best exemplified by the fact the area’s top 20 mortgage lenders saw a 1.1 percent increase in loans closed, but a 12.6 percent drop in value.

“It’s been an amazing time of change,” White said.

 

Change is Good

Few lenders saw more change for the better in Benton and Washington counties than Bank of Arkansas NA. Jump-started by a change in mortgage lending leadership, BOA enjoyed an increase in volume of more than 100 percent and an increase in value of almost 24 percent.

“We rocked,” BOA mortgage market manager Kay Weiderhaft said.

Weiderhaft was hired in 2008 and charged with boosting the company’s business. Her first steps were adding personnel and raising BOA’s presence in the community.

“Many of them had good and established relationships with the homebuilders and realtors locally,” Weiderhaft said of the loan officers she hired, “and have done a phenomenal job of promoting the bank and our mortgage services.

“We were sort of a best-kept secret.”

Weiderhaft was quick to add falling interest rates have helped BOA’s recent successes. She also pointed to the fact BOA utilizes local processing and underwriting, and services its own loans.

“Customers don’t have to send their file off to someone in a state somewhere else that doesn’t know the market and doesn’t know the borrower,” Weiderhaft said.

Those kinds of plusses, as well as the first-time homebuyers credit, however, were met with the aforementioned tightened lending standards. Those practices made it tough in some instances for lenders, and proved to be a double-edged sword for consumers.

“What is better for the consumer is there’s more disclosure,” Weiderhaft said. “There’s more opportunity on the front end for the consumer to make a good and solid decision about financing a home.

“They have a guarantee now, that what the lender tells you on the front end is going to be replicated at the closing table, that there’s not going to be the unknowns come in.”

The flip side, Weiderhaft and others agreed, is some of those looking to refinance were subjected to more scrutiny than when they obtained their original mortgages.

“It’s the most dramatic change in my career,” said White, a 26-year industry vet.

“I don’t think the industry has gotten to an overzealous point,” Weiderhaft added. “I think we’re probably right where we need to be, given the times we’re in.

“That doesn’t mean we can’t still write loans. There’s money available, and will be for a while. You’ve just got to be willing to meet the criteria.”

 

Playing the HARP

Wells Fargo Home Mortgage remained the second-ranked entity on the Business Journal’s annual list of largest mortgage lenders (p. 13), seeing a 54 percent jump in loans closed. That was tempered somewhat by a 64 percent drop in value.

The rest of the top five consisted of Iberiabank FSB, Bank of America, and First Security Bank.

Iberiabank Corp. changed the name of Pulaski Bank and Trust Co. to Iberiabank FSB in May 2009, so Pulaski and Iberiabank figures were combined for purposes of the list. Similarly, Bank of America announced it would acquire Countrywide on Jan. 11, 2008, so its figures were combined in all instances.

Charlie Platt, branch manager at Wells Fargo’s Springdale operation, said the increase in volume and drop in value largely can be traced to the fact the lender did so many Home Affordable Refinance Program loans. HARP is a federal program developed to help homeowners who either don’t have enough equity to use traditional re-financing means, or are having problems making payments on their current mortgages.

“We did a ton of those, and still do,” Platt said, adding the program is set to expire in the second quarter of 2011 if it isn’t extended.

Platt, like his fellow lenders, also wonders how long current low interest rates will last. His best guess is they will begin to rise next year.

That likely would alter the ratio of customers refinancing and those making purchases.

“I think we’re going to see a lot of re-finances into 2011, into the first two quarters,” Platt said. “Then I think we’re going to see our rates start to move up fairly significantly next summer, if not sooner.

“I’m hoping at that point there’s a lot of pent-up demand to purchase homes.”

Platt pointed to new construction in Fayetteville’s Belclaire subdivision as a sign that demand might be percolating. Belclaire is on Highway 112, near The Blessings golf course and Clear Creek subdivision.

“It’s great to see homes going in there,” Platt said. “I mean, those roads have been cut out for three or four years, so I’m excited when I see things like that happening because people are at least preparing for the rebound in the market.

“Now, it might be four years before we’re back to where we were value-wise … but we just have to turn that corner.”

 

Crystal Ball

White said he also has been encouraged by “pockets of business” in Northwest Arkansas.

“It’s starting to solidify, and has seemingly hit bottom,” White said.

Others, though, aren’t as optimistic about the local market’s turnaround time.

“I think we have a ways to go, quite frankly, but I tend to have a very cautious approach,” Widerhaft said. “We’ve got too many loans in default that haven’t made their way through the system.”

In the meantime, low rates continue to fuel enough activity to keep 2010 projections relatively in line with 2009 totals.

“We’re going to come in very close to, or over, what we did in 2009,” Platt said. “And it’s funny, because if you’d asked me that question in mid-summer, I would’ve said we’ll be at 80 or 85 percent of what we did in 2009.

“But the numbers have continued to swell because rates got so low this fall again.”

But with those rates not expected to last and pending legislation that might further tighten standards, most lenders hesitate to look to far into the future.

 “I don’t want to get out my crystal ball,” White said with a laugh.