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

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Bank and real estate executives say theier wealthy clients still remain wary ofthe economy’s sharp but acknowledge that with the Dow Jones Industrial Averagee up nearly 2,200 pointws over the past three months there’s growing confidencew about the direction of their fortunes. That new confidencde is liberating wealthy homebuyers toborrow again. Jumbo mortgage activity is percolatingy even with virtually no secondary market forthe loans. Leadingt the charge is Bank of NewYork Mellon’s Boston-based wealth management division.
The company’ds in-house mortgage operations in Boston cater tothe nation’ top 1 percent of wealth and have put up recorf numbers this year. "We’ve seen significan growth,” said Erin Gorman, national saless director for the mortgage business at BNY MellonWealth Management. “We’ve been lending all along, and we didn’t get caught up in the hiccups of the secondary During the first five monthsof 2009, BNY Mellon’z jumbo mortgage activity is up 32 percent on a dollarr volume basis, compared with the year-ago Gorman said Boston is one of the best markets. Jonathajn Radford, Coldwell Banker Residentialo Brokerage’s No.
1 Boston ageng in 2008, said there has been renewed interesyt inthe high-end market since April 1. He said 36 properties, of $1 millio n and up, went under agreement in March, and that figur e jumped to 105 in April and 170in May. Even thoug h BNY wealth management’s average deposits fell 12 percent in thefirst quarter, the average loan balance surged 23 percent to $5.4 billion, compared with the year-earlier period. That increass was fueled by a recordf level of jumbo mortgage With an average size ofabout $1 jumbos have been a bright spot amid lower asset and wealth management fees, accordingg to analysts at Barclayw Capital.
BNY Mellon doesn’t discussx individual mortgage deals, but real estat e records filed in Boston reveal plentyof big-ticketr deals in recent Rivals include Boston Private Bank & Trust Company, Firstf Republic Bank and even some community banks, such as Needhaj Bank, have stepped in to meet BNY Mellon, however, seems to have the most capitapl to throw around for its clients. For recently retired Staples Inc. director Martimn Trust took outa $6.2 million mortgage on his condo at the swankl Mandarin Oriental at 776 Boylstomn St. Trust received an interest-only, adjustable rate mortgage from BNY Mellomn that starts with a fixed interest rateof 4.
75 according to documents on file at the Suffolk Count Registry of Deeds. The interest rate will adjust to 2.25 plus the one-year London Interbank Offered Rate (LIBOR). that’s cheap money, about 3.85 because the one-year LIBOR rate has been aboutf 1.6 percent. Another recent deal was a $1.176 million mortgage Boston Private wrote for the owner of a Beacon Hill residence on MounftVernon Street, records show. John Sullivan, executiv e vice president of BostonPrivatde Bank’s residential lending department, said even wealthy clients have to feel secure about their jobs and their incomes before taking out big mortgages.
“It’s the same as someone takingg outa $200,000 mortgage,” Sullivan said. Like BNY Boston Private originates adjustable-rate mortgages and holdse them in its loan When the global credif crisis vaporized the secondary marketffor jumbos, portfolio lenders could keep doing what they were doing becauser they were not relying on anyone else to buy theirt loans. Another advantage also materialized: portfoliio lenders scooped up new clientd whose banks stopped doing big jumbos when the secondaryymarket froze. Gorman said some rival lenderse are returning to the jumbo market as the economy stabilizes.
“As money elsewhere dried up for we earned a reputatio n asthe go-to player in jumbo And that puts us in a stronvg position as other lenders gingerly move back onto the Lanse Robb, who brokers the sale of mansionws and estates on the North Shoree for LandVest Inc., said prices have come way down in the past but buyers still want a discountt even after asking prices have been lopped off by millionss of dollars. “When they feel this is the the jumbo market will really take Robb said. One of his most expensives listings isthe $12.25 million Wyck Estate, a Manchester-by-the-Sea replicq of a French chateau.
Sullivan said jumbo mortgagwe lending presents a great opportunity for a bank to expand its relationship witha client. New business, he is mostly referrals from othert clients, real estate brokers, financial lawyers and accountants. “The mortgage leads the way as an introduction tothe bank,” Sullivan