|
Special Reports
Branch Development
Mercantile Expanding Correspondent Program
By Alton Gary Simpson
Mercantile Commercial Capital here has expanded its correspondent offices nationwide.
The lender offers ACE, short for Area Correspondent Exclusive program, which provides residential mortgage brokers
the opportunity to originate commercial loans for Mercantile Commercial. As of June, the lender had just under
$44 million in volume, which puts it 30% ahead of where it was last year at this time.
Chris Hurn, chief executive and president of Mercantile Commercial, noted many brokers have talked about adding
small-balance commercial loans to their product mixes. "A lot of mortgage brokers have been fairly nervous
over the years in dealing with commercial transactions." He said that some of this fear has abated in recent
years because of the efforts of InterBay Funding and Silver Hill Financial, both subsidiaries of Bayview Financial
LP, which have been aggressively marketing their small-balance commercial offerings. He was quick to differentiate
its lending niche from Mercantile Commercial's, noting that it deals mostly in commercial stated deals. He added,
"They're a little bit tougher to get done and by virtue of that market may leave a bad taste in brokers' mouths
because deals don't always happen."
In contrast, Mercantile Commercial specializes in U.S. Small Business Administration 504 loans, which want to acquire
or develop their own facilities. According to Mr. Hurn, the company leads its offer to the borrower with the SBA
504 loan. "If they don't qualify for [SBA 504] we can do commercial stated as well as conventional financing."
He added that the company always leads with the SBA 504 because of its longer loan terms, lower interest rates
and the lower downpayment requirements, usually from one-third to one-half of what banks require. "We're the
nationwide experts at it and what happens is after [brokers] do one deal with us, they inevitably come back and
do a second deal with us," he noted. "They certainly refer all of their friends and other peers that
own businesses to us."
Mr. Hurn said that there are about 160 areas throughout the country where the company is seeking mortgage brokers
to represent Mercantile Commercial. "They would be our local presence, handle things from a sales perspective
and we would do everything else for them," he said. Among the things that Mercantile Commercial will do for
brokers who have a correspondent relationship with the lender are marketing, underwriting, funding and closing.
"We provide the entire back office for them and they represent us in a given area," he added. "So
far it has worked out very well."
According to Mr. Hurn, the company already has about 19 correspondents across the nation and that all but one came
from the residential side. He said that the transition from the residential side to the commercial side could be
a bit rocky at first. "For some of these guys there is a little bit of retraining, or maybe untraining,"
said Mr. Hurn. "We obviously put them through our training program to show them exactly what we're looking
for - how we go to market, how we sell, how we position, how we do underwriting, how we know if it's a good deal
or not. We do all of that for them, but I'd be lying if I didn't tell you that it's a little bit rocky to begin
with."
He pointed out that there are more criteria that need to be satisfied on the commercial side than taking a FICO
score. He also noted that commercial deals take a much longer time to complete than what brokers coming from the
residential side may be used to.
Mr. Hurn said that brokers receive two days of training at the company's headquarters where they learn the ins
and outs of commercial lending as Mercantile Commercial practices it. "We don't hire anyone that we haven't
met face to face," he said. "We want to check them out and let them know that we're a legitimate organization.
We're forming long-term partnerships. It's not something we want to do over the phone."
|
