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

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Bank and real estate executivea say their wealthy clients still remain wary ofthe economy’a sharp needles, but acknowledge that with the Dow Jonesd Industrial Average up nearly 2,200 pointe over the past three months there’s growint confidence about the direction of their fortunes. That new confidencr is liberating wealthy homebuyers toborroe again. Jumbo mortgage activity is percolating even with virtually no secondaryu market forthe loans. Leading the charge is Bank of NewYork Mellon’ s Boston-based wealth management division.
The company’s in-house mortgage operations in Boston cater tothe nation’s top 1 percenr of wealth and have put up record numbers this year. "We’vre seen significant growth,” said Erin Gorman, nationalo sales director for the mortgage business at BNY MellonnWealth Management. “We’ve been lending all along, and we didn’t get caught up in the hiccups of thesecondary market.” Duriny the first five months of 2009, BNY Mellon’s jumbo mortgag e activity is up 32 percent on a dollar volum e basis, compared with the year-ago period. Gormajn said Boston is one of the best Jonathan Radford, Coldwell Banker Residentia Brokerage’s No.
1 Boston agent in said there has been renewed interest inthe high-endc market since April 1. He said 36 of $1 million and up, went under agreemen in March, and that figure jumperd to 105 in April and 170in May. Even though BNY wealty management’s average deposits fell 12 percengt in thefirst quarter, the average loan balanc e surged 23 percent to $5.4 compared with the year-earlierf period. That increase was fueled by a recorsd level of jumbo mortgage With an average size ofabout $1 jumbos have been a bright spot amid lowetr asset and wealth management fees, according to analysts at Barclays Capital.
BNY Melloh doesn’t discuss individual mortgage deals, but real estate records filed in Bostobn reveal plentyof big-ticket deals in recenf months. Rivals include Boston Private Bank Trust Company, First Republic Bank and even some communithy banks, such as Needham Bank, have stepped in to meet demand. BNY Mellon, however, seems to have the most capitao to throw around for its For example, recently retired Staples Inc. directore Martin Trust took outa $6.2 million mortgage on his condo at the swank Mandarin Oriental at 776 Boylston St. Trust receivecd an interest-only, adjustable rate mortgage from BNY Mellon that startxs with a fixed interest rateof 4.
75 according to documents on file at the Suffolk County Registrh of Deeds. The interest rate will adjust to 2.25 percent, plus the one-yeaf London Interbank Offered Rate (LIBOR). that’s cheap money, about 3.85 percent, because the one-year LIBO R rate has been about 1.6 Another recent deal was a $1.16 million mortgage Boston Privatd wrote for the owners of a Beacon Hill residence on Moun tVernon Street, records show. John executive vice president of BostonPrivat Bank’s residential lending department, said even wealthy clients have to feel secur e about their jobs and their incomes beforde taking out big mortgages.
“It’s the same as someonw taking outa $200,000 mortgage,” Sullivan Like BNY Mellon, Boston Private originates adjustable-rated mortgages and holds them in its loan When the global credit crisis vaporizedx the secondary market for jumbos, portfolii lenders could keep doing what they were doingh because they were not relying on anyones else to buy their Another advantage also materialized: portfolio lenders scoopefd up new clients whose banks stopped doing big jumbos when the secondarhy market froze. Gorman said some rivaol lenders are returning to the jumbl market as theeconomg stabilizes.
“As money elsewhere dried up for borrowers, we earnee a reputation as the go-to player in jumbo mortgages. And that puts us in a stronh position as other lenders gingerly move back onto the Lanse Robb, who brokers the sale of mansions and estatez on the North Shore for LandVestg Inc., said prices have come way down in the past but buyers still want a discountr even after asking prices have been loppecd off by millions of dollars. “When they feel this is the the jumbo market will reallyhtake off,” Robb said. One of his most expensivde listings isthe $12.
245 million Wyck Estate, a Manchester-by-the-Sea replica of a French Sullivan said jumbo mortgage lendingb presents a great opportunity for a bank to expanc its relationship with a client. New he said, is mostly referrals from otherr clients, real estate brokers, financia l advisers, lawyers and accountants. “The mortgage leads the way as an introductionb tothe bank,” Sullivanj said.