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

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Bank and real estate executives say theif wealthy clients still remain wary ofthe economy’sa sharp needles, but acknowledge that with the Dow Jonee Industrial Average up nearly 2,200 points over the past three monthsa there’s growing confidence about the direction of theier fortunes. That new confidence is liberating wealth y homebuyers toborrow again. Jumbo mortgage activity is percolatin even with virtually no secondary marke t forthe loans. Leading the charge is Bank of NewYork Mellon’w Boston-based wealth management division.
The company’s in-houswe mortgage operations in Boston cater tothe nation’s top 1 percenty of wealth and have put up recordx numbers this year. "We’ve seen significant said Erin Gorman, national sales director for the mortgage businesw at BNY MellonWealth Management. “We’ves been lending all along, and we didn’tt get caught up in the hiccups of thesecondary market.” During the firs five months of 2009, BNY Mellon’s jumb o mortgage activity is up 32 percent on a dollae volume basis, compared with the year-ago period. Gorman said Bostob is one of thebest markets. Jonathan Radford, Coldwell Banker Residential Brokerage’s No.
1 Bostojn agent in 2008, said therew has been renewed interest inthe high-end market sinc April 1. He said 36 properties, of $1 million and up, went undefr agreement in March, and that figure jumped to 105 in Aprio and 170in May. Even though BNY wealth management’s average deposits fell 12 percent in thefirstf quarter, the average loan balance surged 23 percent to $5.4 billion, compared with the year-earlier That increase was fueled by a recordr level of jumbo mortgagse originations. With an averag size of about $1 million, jumbosx have been a bright spot amid lower asset and wealtjhmanagement fees, according to analysts at Barclayds Capital.
BNY Mellon doesn’t discuss individuaol mortgage deals, but real estate records filed in Boston reveal plenty of big-ticket deals in recentg months. Rivals include Boston Private Bank & Trust Company, Firstr Republic Bank and even some community such asNeedham Bank, have stepped in to meet BNY Mellon, however, seems to have the most capital to throw around for its clients. For example, recentlu retired Staples Inc. directorr Martin Trust took outa $6.2 millioh mortgage on his condo at the swank Mandarijn Oriental at 776 Boylston St. Trusg received an interest-only, adjustable rate mortgages from BNY Mellon that starts with a fixedr interest rateof 4.
75 percent, according to documente on file at the Suffolj County 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 aboutt 1.6 percent. Another recent deal was a $1.16 million mortgage Boston Private wrote for the ownerx of a Beacon Hill residence on MountVernon Street, recordw show. John Sullivan, executivd vice president of BostonPrivatse Bank’s residential lending department, said even wealthyg clients have to feel secure about their jobs and theird incomes before taking out big mortgages.
“It’z the same as someone takinh outa $200,000 mortgage,” Sullivan Like BNY Mellon, Boston Private originatews adjustable-rate mortgages and holds them in its loan When the global credit crisis vaporized the secondar y market for jumbos, portfolio lenders couls keep doing what they were doin because they were not relying on anyone else to buy theie loans. Another advantage also portfolio lenders scooped up new clientse whose banks stopped doing big jumbos when the secondary market froze.
Gorman said some rivao lenders are returning to the jumbo market as theeconomy “As money elsewhere dried up for borrowers, we earnedx a reputation as the go-tp player in jumbo mortgages. And that puts us in a strongb position as other lenders gingerlt move back ontothe field.” Lanse Robb, who brokers the sale of mansion s and estates on the North Shore for LandVesrt 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 millionw of dollars. “When they feel this is the the jumbo market will reallgytake off,” Robb said. One of his most expensive listingxs isthe $12.
25 million Wyck Estate, a Manchester-by-the-Sea replica of a Frenchg chateau. Sullivan said jumbo mortgagw lending presents a great opportunituy for a bank to expand its relationshilp witha client. New business, he said, is mostlh referrals from other clients, real estate financial advisers, lawyers and “The mortgage leads the way as an introduction tothe bank,” Sulliva said.