Silver Hill Financial has closed its office at One Edgewater Drive in Norwood, the company’s only branch in Massachusetts.
The Wall Street credit crunch is being cited as a key reason for last week’s decision by Bayview Financial to shut down one of its Massachusetts commercial lending divisions and reduce staff by half at the other.
Commercial lenders and brokers in New England say they’re certain that Wall Street investors’ skittishness about buying any mortgage-backed security is what led to the changes at Silver Hill Financial and InterBay Funding. Bayview Financial securitizes its mortgage loans.
Donato Maisano, president of Specialized Commercial Lending in Avon, Conn., said the layoffs are more than likely just a numbers game.
“The Wall Street markets are a little skittish right now, so there’s not necessarily the market [to purchase commercial loans] like there used to be,” he said. “If they can’t originate as many loans, they can’t afford to keep as many salespeople.”
Silver Hill Financial has closed its doors in Norwood, while InterBay Funding told the state Executive Office of Labor and Workforce Development it would permanently lay off 65 of 120 staff members in Mansfield – mostly loan officers and processors – starting April 3.
“The [Boston-area] office has been closed, but Silver Hill is still taking loans,” Silver Hill Senior Vice President for Marketing and Communications Solomon Wancier told Banker & Tradesman, which was the first news organization to report on the changes last week. Silver Hill’s Norwood office was located at One Edgewater Drive.
InterBay officials did not return calls seeking comment.
InterBay and Silver Hill are two of three loan origination divisions of Bayview Lending Group, the commercial arm of Coral Gables, Fla.-based Bayview Financial. Both specialize in small-balance commercial loans, which range in size from $100,000 to $1.5 million. The Norwood and Mansfield offices are the only Massachusetts presence for each.
Both companies also closed offices in other states recently, according to blog postings last week on the mortgage industry watchdog Web site implode-explode.com. Wancier said employees at the Norwood Silver Hill office would not be relocated to the company’s Miami office, which remains open. Silver Hill has nine offices throughout the country, but it is unclear how many actually have closed.
Bayview Lending Group’s third division, Commercial Direct, does not have a Massachusetts office.
‘Checks and Balances’
InterBay Funding and Silver Hill have different underwriting models. InterBay uses a stated-income/stated-asset underwriting process, according to its Web site, while Silver Hill has a more traditional underwriting process that requires income-and-asset verification.
Stated-income/stated-asset loans have been blamed in large part for the current residential mortgage foreclosure crisis, but Massachusetts lenders said comparing the two types of loans by that measure is not relevant.
For example, residential loans generally require much less money down than commercial ones, and rely on fewer factors, said Denise Leonard, president of the Massachusetts Mortgage Association and owner of Constitution Mortgage in Wakefield. Commercial real estate loans – the focus of InterBay and Silver Hill – also count factors such as potential property income.
Commercial underwriting guidelines “are far more stringent,” she said.
“They have far more checks and balances,” Maisano added.
Kim Meader, head of commercial lending for Salem Five Bank, said InterBay may have decided to concentrate on a “niche” market of riskier loan customers, such as restaurants, that some banks shy away from. Restaurant owners often have a more uneven income and one-time expenses that make a stated-income loan a more likely option.
“[InterBay] may be perfectly good underwriters, but it sounds like that marketplace is probably drying up,” Meader said.
Leonard, who worked with Silver Hill, said the company, a longstanding member and supporter of MMA, is “awesome” to do business with.
“I would be shocked if the reason for this was bad loans,” she said.
Maisano said Silver Hill, which has been a frequent advertiser in Banker & Tradesman, and InterBay have been his office’s “bread and butter” in recent years.
He still intends to work with them – it will just be a little harder to find local people now, he said.
George J. Fantini Jr., chairman and principal of Fantini & Gorga, a Boston commercial mortgage brokerage and an affiliate of Boston-based Eastern Bank, downplayed the potential impact of the cuts at InterBay and Silver Hill.
“It’s no surprise, since many of these sorts of lenders are struggling,” Fantini said. “But in the scheme of things, in Massachusetts they are a small player, so this will not have an impact of consequence on Massachusetts borrowers.”
According to Bayview’s 2006 Year in Review, posted online, the company and its various divisions, including InterBay and Silver Hill, employ about 2,000 people in the United States, Canada and Europe.
