American Home Mortgage enters Springfield

by Maria Hoover

Inside Business Editor

mhoover@sbj.net

Mike Rankin's job title is the same, but the company listed on his business card is different. Effective July 31, Chase Manhattan Mortgage closed the Springfield branch office that Rankin managed at 2432 E. Madrid. Immediately after Chase closed, the location reopened as another company, American Home Mortgage, and retained Rankin as retail branch manager.

Rankin said Chase officially announced the closure of the Springfield office June 30, although he'd heard about it unofficially by mid-June.

"Chase, as a result of the merger with Bank One, apparently left it to the merge partner, Bank One, to decide how to manage the mortgage operation," Rankin said. "As I understand it, Bank One has decided that they should have fewer loan officers and branches doing higher volume per branch, rather than having more branches with lower volume."

At the time of the merger, he said, Chase had 3,000 loan officers and was planning to go to 4,000, but Bank One decided to cut 100 branches in the region that includes Springfield, Kansas City, Wichita, Kan., and Omaha, Neb., and trim down to 1,500 loan officers.

According to a news release on the JP Morgan Chase Web site, the merger with Bank One Corporation was completed July 1. The combined company is known as JP Morgan Chase & Co., with assets of $1.1 trillion and operations in more than 50 companies.

Chase Manhattan entered the local market in 2001, and Rankin was with the company from that time until it closed.

Rankin said that in 2003, the Springfield Chase branch's mortgage volume was about $72 million and it was $30 million through June 30.

By comparison, Rankin said, "If you extrapolate where we were (in 2003) after six months, and assume we were still ongoing that probably would have been (about) $60 million for this year," which wouldn't have been bad in what he called a "cyclically softer" period because of rising interest rates.

"Chase wasn't looking at profitability, because we were quite profitable as a region and as a branch," Rankin said. "It was the philosophical concept that half the people doing twice the work would save the costs of the bricks and mortar for (the locations) that (Chase) got rid of."

While the closures likely did save the company some money in terms of office space and employee benefits, Rankin said it may have been better to make cuts in the number of salaried staff as opposed to loan officers, who are paid on commission.

"The commission staff isn't costing you as much, because they only get paid if they're doing business and making you money at the same time," he said.

But the downsizing may simply be a sign of the times, Rankin said.

Washington Mutual, a company with assets of $278.54 billion, recently announced the elimination of 2,500 loan officer jobs across the country. American Home Mortgage has signed a definitive agreement to acquire Washington Mutual residential home loan centers in several states, including Missouri.

Rankin said that what most likely happens is that big banks and corporations will add staff to meet demands, but when that demand slacks off, cutting staff is a quick way to save money.

At its peak, he said the Springfield Chase branch employed eight loan officers, two processors and a receptionist, with Rankin as one of the loan officers.

While seven of the former Chase employees opted to seek opportunities elsewhere either with Chase via its St. Louis office, or at other local banks and mortgage companies loan officer Chad Bell, senior processor Sandy Davis and receptionist/loan opener Betty Daniels remain with Rankin as the nucleus of the new American Home Mortgage branch.

Bell was the Springfield Chase office's biggest producer in 2003, Rankin said, bringing in nearly $20 million in loans.

American Home Mortgage

American Home Mortgage is a real estate investment trust with headquarters in Melville, N.Y.

According to American Home Mortgage's Web site, the company has more than 3,000 employees, and operations in all 50 states. The company is publicly traded on the New York Stock Exchange under the symbol AHM.

Rankin said Mike Holmes, who was his regional manager with Chase, is now his regional manager with American Home Mortgage, and he was responsible for bringing the company into Springfield.

"(Holmes) sort of put all of his branches together and scooped up the people when he realized that (closure) was sort of the handwriting on the wall," Rankin said.

Rankin said Holmes spoke with several companies before linking up with American Home Mortgage, which was ready to grow.

"We are still in a growth mode. We continue to look for acquisitions, as we just made the acquisition of Washington Mutual's loan centers that they were going to be closing in 18 states," said American Home Mortgage spokesman John Lovallo.

According to an American Home Mortgage news release announcing the Washington Mutual acquisition, Washington Mutual is a retailer of financial services, operating more than 2,400 retail banking, mortgage lending commercial banking and financial services offices through the United States.

Lovallo said that the Springfield office of Washington Mutual at 3337 E. Ridgeview is included in the acquisition, but a phone call to the local office was not returned.

The Chase changeover is a different arrangement, Lovallo said.

"That's an opportunity for them to join American Home to conduct business with, versus Chase Manhattan," he added.

Making the switch

Rankin said customers will notice some changes generally for the better. Loans are limited to residential property only, Rankin said, but many of the products, including variable, adjustable rate, FHA and VHA loans, remain the same. As a real estate investment trust, Rankin said, American Home Mortgage isn't bound by bank-specific lending laws, which he said do more to protect the bank's capital than to protect consumers.

"We still have in place all of the laws that we are following and are obligated to follow to protect the consumer. We just don't have the litany of bank-related, constraining, handcuffing, if you will, laws that apply ," he said.

Rankin and his staff continue to work with several lenders to serve its customers.

"We will sell loans to various lenders, one of whom is probably Chase," Rankin said. "Sometimes, we package them in mortgage-backed securities and assign the servicing to somewhere else, but typically, we are selling the loan and therefore getting the customer the best rate and terms available."

For the customer, the process is seamless, Rankin said. "The consumer doesn't know that we've looked at three lenders and found them the best deal. They just know they got the best deal. We close it in our name and then tell them the payment will be going to (the lender) in the future," he said.

Customer service

Rankin and his staff will receive training on American Home Mortgage's marketing techniques, particularly the Home Buyers Marketing program it offers.

"It's a way of a consumer accessing the real estate sales database and coordinating with the mortgage lender and a particular Realtor to allow the customer to shop, instead of wasting the Realtor's time, taking them to see 100 houses," Rankin said. "What this will do is to allow the customer to sort through the first 100 houses, or 50 or 25 or whatever they want to see" and narrow it down before going with a Realtor to see the houses they're most interested in.

Projections

For the new Springfield office of American Home Mortgage, Rankin said he would like to add four loan officers in the next six to nine months.

"If we did that and were able to do $35 (million) to $50 million for the first year I think that would make everyone satisfied. I think it's achievable, and would allow us time to get qualified real estate loan officers," Rankin said.