When John Ritacco joined Mount Vernon-based Community Mutual Savings Bank in 2005 as president and CEO, the forces that would eat the economy were bundling subprimes and hawking them like blue chips. Business name-droppers could still mention Lehman Brothers and Bear Stearns ”“ both shuttered by ”™08 ”“ with pride.
When he answered the phone May 30 in the bank”™s White Plains administrative office, the storm, if it has not passed, is passing and CMS”™ five branches ”“ in Silver Lake, Greenburgh, Mount Kisco, Eastchester and the Mount Vernon headquarters ”“ remain open for business. Ritacco said for those with good credit in the mortgage hunt, “Not much has changed.”
He cited the credit score of 660 as a line of demarcation. Those below it will be asked for 20 percent or more down payment when before some of them put down very little with little credit history to support the deal, the so-called no-doc and low-doc loans. “They were riding their equity,” he said, “drawing from it, and the properties fell in value.
“All of it came home to roost for some: more debt than value of the house, a lost job ”“ one spouse loses a job or both lose their jobs ”“ the value underwater; they cannot sell,” Ritacco said. And for those who got in over their heads, regardless of blame, “People have had their credit affected in a very material way.”
“We saw some delinquencies,” Ritacco said. “But not too many. Not much has changed for us. As a community bank we”™ve always met underwriting guidelines in a traditional way.”
CMS writes about 70 mortgages per year totaling some $35 million, making the average loan $500,000. A weather eye on income-expense ratios remains standard procedure and always has been, even as the bank remains keen on personal service. “We can”™t tell people with a big enough megaphone how easy it is to get from application to closing,” Ritacco said.
“The advantage we have is the ability to turn around loans much quicker,” he said. “There is a frustration among many applicants; with the big banks they wait for months on end with no response. We did three mortgages like that in the last month: people who were completely frustrated with large banks and came to us and reapplied.”
“It can be frustrating for the buyer,” said Chris Meyers, managing principal, Rye Brook-based Houlihan-Lawrence. “It can delay closings; it”™s become a rather tedious process.” But, he said, “I think there”™s wisdom in the current lending standards.
“In an environment where liquidity is strong, if the credit rating is above 700, there should be no problem with a loan today,” Meyers said. “That was not the case three years ago.”
Houlihan-Lawrence has for the last five years partnered with Wells Fargo in Thoroughbred Mortgage, owned 50-50.
Thoroughbred originated 650 mortgages in 2012 valued at $320 million. By the end of June, Meyers said Thoroughbred should hang a shingle saying just that ”“ Thoroughbred ”“ under the sole ownership of Houlihan-Lawrence. For now, however, the name remains locked in state Department of Taxation and Finance paperwork and Thoroughbred does business as Silvermine Ventures L.L.C in Rye Brook.
Pennsylvania-based Customers Bancorp Inc. and CMS, meantime, initiated a merger in August 2012. Ritacco said that in April the agreement to merge was extended through the end of the year. “For us,” he said, “it”™s business as usual.”
Experian, which tracks credit scores via 17,000 employees in 44 countries, places the average New York mortgage-seeking credit score at 728 for 2011, its most recent data.
At Silvermine, Senior Vice President Dan Duggan said the 660 credit rating was a reasonable barometer for acquiring a mortgage. Still, “The bar is higher than before the crisis. Generally there is a higher level for the down payment and a higher credit score is required; it has affected lending.”
Despite that, Duggan said the sales market has improved. “We are seeing a pick up in the purchase market: up 10 to 12 percent on purchases between a year ago and now.”
Silvermine works in Westchester, Putnam and Dutchess counties. The Silvermine/Thoroughbred management team of seven is already in place. Duggan expects more hiring “as soon as the license comes through.” One thing will not change, however, “We always provide excellent customer service.”
Nationally, web magazine Mortgage Professional America said the number of monthly mortgage payments late by more than 30 days was trending in the right direction: 6.59 percent in April, down from 6.8 percent in January. It cited the optimal rate as “below 5 percent.”
“The government has put a number of programs in place to help underwater properties, including with principal relief and modifications to payments,” Duggan said. “Generally, the feeling is you”™re better off in your home, living in it, keeping up the property, as opposed to having it fall into foreclosure.”
Duggan said the disproportionately expensive homes in Westchester, relative to the nation as a whole, presented a special challenge.
“The houses were expensive and the rates were up. That impacted any market with a higher share than average of higher-priced homes. That”™s changed. More players are seeking jumbo loans.
“The portfolio managers are not diving into the market,” he said of the real estate-investment market, “but they”™re certainly getting interested.”
