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Special Reports
Construction Lending: Building
the Foundation
Construction Financing that Focuses on Product
By Jennifer Harmon
FORT WAYNE, IN -- As a mortgage company that specializes in construction financing,
Waterfield Mortgage is focusing its attention on making enhancements to its construction financing products and
services including new product development, according to Tom Talarico, senior vice president of the system-built
homes division.
Mr. Talarico is an industry veteran with more than 27 years experience. His company
is the largest privately held mortgage lender in the country, which also handles construction loans for homebuyers
nationwide.
"We recently introduced enhancements to our 'one-close' construction loans
that offers buyers more flexibility and enables them to lock their rate at the time of application to protect them
from increasing interest rates," said Mr. Talarico.
Waterfield originates and processes FHA, VA and conventional loans and has a servicing
portfolio of almost $20 billion. It provides a variety of loan products including fixed-rate loans, adjustable-rate
mortgages and limited documentation programs.
The company offers construction loans through its retail origination offices as
well as through its wholesale division, where it maintains close contact with a large network of mortgage brokers.
As a national lender, Waterfield has seen impressive construction loan activity through its retail offices in several
areas such as Phoenix, Houston, Denver, Indianapolis, Las Vegas and Portland, Ore.
Additionally, Waterfield's Production Alternatives business unit has a separate
construction loan team dedicated to financing new construction for buyers of system-built homes - modular and panelized.
Through its "buyer direct" program, Waterfield provides construction
and permanent financing directly to homebuyers through one-close, construction-to-perm financing and two-close,
standard construction loans. Through the "builder direct" program, Waterfield provides construction financing
directly to builders including spec loans, pre-sold specs and lot loans.
Waterfield maintains close relationships with a nationwide network of both "tract"
builders as well as isolated or "scattered lot" transactions.
"Good builder/lender relationships are becoming increasingly important for
builders as they are currently facing a host of new challenges, including increases in the cost of builder's liability
insurance, lumber and fuel, and the potential of future cement shortages," Mr. Talarico said.
"Working with a lender like Waterfield that clearly understands the builders'
business helps them to be more successful."
Pertaining to recent construction loan volumes, new loan products in recent years
have helped more consumers to buy or build. Low downpayment requirements and downpayment assistance programs have
also provided some of the impetus, according to Mr. Talarico. "Homeownership grew to 68% in 2002 and is expected
to grow to 70% over the next 10 years," he said. "Of that volume, system-built homes continue to enjoy
an increasing market share of the new construction as consumers become more knowledgeable about these construction
methods."
Interest rates have been at a historic low since January 2001. Low rates have
helped countless families qualify for mortgage loan financing and have sparked record levels of new construction,
said Mr. Talarico.
"During the second quarter of 2004, interest rates have increased some. While
this may account for some slowdown in housing starts, the pace of construction is still expected to be very strong."
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