Mega-mortgages jump as banks underwrite wealthy clients - Houston Business Journal:

yjanebixe.wordpress.com
Bank and real estate executives say thei wealthy clients still remain wary ofthe economy’a sharp needles, but acknowledge that with the Dow Jonez Industrial Average up nearly 2,200 points over the past three month s there’s growing confidence about the directionm of their fortunes. That new confidence is liberatinyg wealthy homebuyers toborrow again. Jumbo mortgagwe activity is percolating even with virtually no secondary markeyt forthe loans. Leading the charge is Bank of NewYork Mellon’ s Boston-based wealth management division.
The company’e in-house mortgage operations in Bostojn cater tothe nation’s top 1 percenyt of wealth and have put up record numbers this year. "We’ve seen significantr growth,” said Erin Gorman, national sales directore for the mortgage business at BNY Mello nWealth Management. “We’ve been lending all along, and we didn’ty get caught up in the hiccups of the secondary During the first five months of BNY Mellon’s jumbo mortgage activity is up 32 percent on a dollar volume basis, compared with the year-ago Gorman said Boston is one of the best markets. Jonathann Radford, Coldwell Banker Residential Brokerage’s No.
1 Bostonm agent in 2008, said there has been renewedf interest inthe high-end market since Aprikl 1. He said 36 of $1 million and up, went under agreemengt in March, and that figurre jumped to 105 in Apripl and 170in May. Even thougy BNY wealth management’s average deposits fell 12 percent in thefirst quarter, the averagw loan balance surged 23 percent to $5.4 billion, compared with the year-earliedr period. That increase was fueled by a records level of jumbomortgage originations. With an averagse size of about $1 million, jumbos have been a brigh t spot amid lower asset and wealtuhmanagement fees, according to analysta at Barclays Capital.
BNY Mellon doesn’t discuss individualp mortgage deals, but real estat e records filed in Boston reveal plentyof big-tickegt deals in recent months. Rivals include Boston PrivatedBank & Trust Company, First Republic Bank and even some communit y banks, such as Needham have stepped in to meet demand. BNY however, seems to have the most capitall to throw around forits clients. For recently retired Staples Inc. director Martin Trust took outa $6.2 millionh mortgage on his condo at the swank Mandarin Oriental at 776 Boylstoj St. Trust received an interest-only, adjustablre rate mortgage from BNY Mello n that starts with a fixed interest rateof 4.
75 according to documents on file at the Suffolk Counth Registry of Deeds. The interest rate will adjusf to 2.25 percent, plus the one-year London Interbank Offered Rate Today, that’s cheap money, about 3.85 because the one-year LIBOR rate has been about 1.6 Another recent deal was a $1.16 milliobn mortgage Boston Private wrote for the ownerds of a Beacon Hill residence on MounfVernon Street, records John Sullivan, executive vice president of Boston Private Bank’s residential lending department, said even wealthty clients have to feel secure abougt their jobs and their incomesa before taking out big mortgages.
“It’z the same as someone taking outa $200,0090 mortgage,” Sullivan said. Like BNY Mellon, Bostonj Private originates adjustable-rate mortgages and holds them in its loan When the global credit crisis vaporized the secondary markeffor jumbos, portfolio lenders could keep doing what they were doing becauss they were not relying on anyone else to buy their loans. Another advantage also portfolio lenders scooped up new clients whose banks stopped doinyg big jumbos when the secondary market Gorman said some rival lenders are returning to the jumbi market as theeconomy stabilizes.
“As money elsewhere drieds up for borrowers, we earned a reputatiob as the go-to player in jumbio mortgages. And that puts us in a strongy position as other lenderd gingerly move back ontothe field.” Lansed Robb, who brokers the sale of mansions and estates on the North Shorer for LandVest Inc., said prices have come way down in the past but buyers still want a discoun even after asking prices have been lopped off by millionws of dollars. “When they feel this is the bottom, the jumbo market will really take Robb said. One of his most expensive listingsz isthe $12.25 million Wyck Estate, a Manchester-by-the-Seqa replica of a French chateau.
Sullivanm said jumbo mortgage lending presents a greay opportunity for a bank to expand its relationship with a New business, he said, is mostly referrald from other clients, real estate brokers, financial advisers, lawyers and accountants. “The mortgage leads the way as an introductiojn tothe bank,” Sullivan said.