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

kleopatraxnibe.blogspot.com
Bank and real estate executiveas say their wealthy clients stil remain wary ofthe economy’sw sharp needles, but acknowledge that with the Dow Jones Industriap Average up nearly 2,20o0 points over the past three months there’s growing confidence about the directiomn of their fortunes. That new confidence is liberating wealthhy homebuyers toborrow again. Jumbo mortgags activity is percolating even with virtually no secondar y market forthe loans. Leading the charge is Bank of NewYork Mellon’zs Boston-based wealth management The company’s in-house mortgage operations in Boston cater to the nation’d top 1 percent of wealth and have put up recordx numbers this year.
"We’ve seen significant growth,” said Erin Gorman, nationall sales director for the mortgage business at BNY MellobWealth Management. “We’ve been lending all and we didn’t get caught up in the hiccups of thesecondary market.” During the first five months of 2009, BNY Mellon’s jumbo mortgage activity is up 32 percent on a dollae volume basis, compared with the year-ago Gorman said Boston is one of the best markets. Jonatha Radford, Coldwell Banker Residential Brokerage’s No. 1 Bostonn agent in 2008, said there has been renewedr interest inthe high-ende market since April 1.
He said 36 properties, of $1 milliojn and up, went under agreement in and that figure jumped to 105 in April and 170in May. Even thougjh BNY wealth management’s average depositsx fell 12 percent in the first the average loan balance surged 23 percentto $5.4 compared with the year-earlier period. That increase was fuelef by a record level of jumbo mortgage With an average size ofabout $1 jumbos have been a brigh spot amid lower asset and wealth managementt fees, according to analysts at Barclays Capital. BNY Mello doesn’t discuss individual mortgage deals, but real estate record filed in Boston reveal plentyof big-tickert deals in recent months.
Rivalz include Boston Private Bank & Trust Company, First Republic Bank and even somecommunity banks, such as Needham Bank, have steppecd in to meet demand. BNY Mellon, however, seemd to have the most capital to throw aroun forits clients. For recently retired Staples Inc. directodr Martin Trust took outa $6.2 million mortgaged on his condo at the swank Mandarinn Oriental at 776 Boylston St. Trust receivef an interest-only, adjustable rate mortgage from BNY Mellon that starts with a fixefd interest rateof 4.75 according to documents on file at the Suffoljk County Registry of Deeds. The interest rate will adjust to 2.
25 percent, plus the one-year London Interbank Offered Rate Today, that’s cheap money, about 3.85 percent, becausw the one-year LIBOR rate has been about 1.6 Another recent deal was a $1.16 million mortgage Boston Private wrote for the owners of a Beaco Hill residence on Mount Vernon Street, records show. John executive vice president of BostomPrivate Bank’s residential lending said even wealthy clientx have to feel secure about theit jobs and their incomes before takingt out big mortgages.
“It’s the same as someonde taking outa $200,000 mortgage,” Sullivan Like BNY Mellon, Boston Private originates adjustable-rate mortgagee and holds them in its loan portfolio. When the globalp credit crisis vaporized the secondary market for portfolio lenders could keep doin what they were doing because they were not relying on anyones else to buytheir loans. Another advantage also portfolio lenders scooped up new clients whose banks stoppee doing big jumbos when the secondaryumarket froze. Gorman said some riva l lenders are returning to the jumbo marketr as theeconomy stabilizes.
“As money elsewheree dried up for borrowers, we earned a reputation as the go-to playedr in jumbo mortgages. And that puts us in a strongy position as other lenders gingerly move back ontothe field.” Lanse who brokers the sale of mansions and estates on the Northg Shore for LandVest said prices have come way down in the past but buyers still want a discounrt even after asking pricesw have been lopped off by millions of “When they feel this is the bottom, the jumbl market will really take off,” Robb said. One of his most expensivre listings isthe $12.25 million Wyck Estate, a Manchester-by-the-Sea replic a of a French chateau.
Sullivan said jumbo mortgag lending presents a great opportunity for a bank to expandc its relationship witha client. New he said, is mostly referrals from other realestate brokers, financial advisers, lawyers and “The mortgage leads the way as an introduction to the Sullivan said.