Liberty Bank absorbs Brown and Wagner Mortgage

A small, locally owned brokerage that specialized in first-time homebuyer loans has ceased operations, but eight of its employees were scooped up by Liberty Mortgage, a division of Springfield-based Liberty Bank.

Liberty Mortgage President Michael Frerking said the bank's residential lending arm has hired six loan officers and two support staff members from Brown and Wagner Mortgage Inc., a nine-year-old company that recently closed its doors. Co-owners Bruce Brown and Steve Wagner, who co-founded the brokerage, are among the officers who transferred to Liberty Mortgage, Frerking said.

"I believe that Bruce and Steve saw the tremendous opportunity to join a larger, well-established regional bank that offers more products, better rates and resources that will enable them to grow their business as loan officers in this ever changing and challenging market for mortgage loans," Frerking said in an e-mail.

The number of mortgage brokers in Missouri has winnowed in the face of industrywide challenges, which include a deflated real estate market and fewer loan products available through fewer national lenders. Mark Delhougne, the Missouri Association of Mortgage Brokers' board president, said the trade association's 120 members today are half the tally from two years ago.

Delhougne said brokers today are working primarily with two types of mortgage loans: those that conform to stricter limits set by Fannie Mae and Freddie Mac, and those insured by the Federal Housing Administration. With subprime loans all but extinct and jumbo loans tougher than ever to finance, smaller brokerages are finding it difficult to compete, he added.

"I don't think this is the end of the small broker community," said Delhougne, a senior mortgage officer at The Private Bank in St. Louis. "I hope that it's not. It plays a vital role in homeownership. But there's no doubt it's going to create opportunities for larger players, and some of this is going to come from banks."

Even for smaller shops that primarily brokered conventional, FHA and Veterans Affairs loans - a group that includes Brown and Wagner - the market has been unforgiving, Frerking said. Spooked by the credit crisis, larger lenders have yanked warehouse lines that fronted loan money to brokers and simultaneously tightened their underwriting standards, he added.

"Those guys have slowly been squeezed out over the last 12 months," Frerking said. "Our benefit is we get some good loan officers out of it. But it's going to be extremely tough for brokers to continue doing business as they were doing before."

Brown and Wagner already had established a business relationship with Liberty Bank, through which the brokerage obtained an $800,000 U.S. Small Business Administration loan in 2007, according to Springfield Business Journal research.

According to Brown and Wagner's site, www.brownandwagner.com, the business employed a total of nine loan officers, not counting the owners, who could not be reached for comment.

With the addition of Brown and Wagner's employees, Liberty Mortgage now has 15 loan officers plus four processors, said Frerking, who noted that the refinancing frenzy is creating plenty of work for the merged staff. Liberty Mortgage also is anticipating more loan volume from new purchases as home sales in the Springfield market pick up following a dismal start in 2009.

Recent data from the Greater Springfield Board of Realtors showed the average first-quarter home sale price was $133,000 this year, up 2.3 percent from fourth-quarter 2008. On the whole, however, home sales were down 11 percent during the same period.

"Most lenders have been extremely fortunate over the last four to five months with the tremendous amount of (refinance loans)," Frerking said. "Refinances will go away, but Springfield has always been a pretty good purchase market."

For the time being, Brown and Wagner staff members retained by Liberty Mortgage are still working out of the former Brown and Wagner office, 1525 E. Republic Road in Kensington Place. Frerking said those employees eventually would move to Liberty's branch at 4625 S. National Ave. Depending on future demand, he said some of those loan officers could be stationed at other branches in the Springfield area.[[In-content Ad]]