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May 2014
Home Lending Done Right
By Kathleen E. Conroy

     When the nation found itself in a mortgage nightmare after 2008, American Security Mortgage Corp. held on tight and persevered.

     It might have been the Charlotte-based firm’s sense of attitude and excellence. It might have been the ethics and strong banking reputations of both founders Jim Abbott and Phil Mahoney. Or it might have been the free hugs.

     Yes, employees at the mortgage banker participate in endless hugs when they come to work each morning, all part of an “unwritten” rule of sorts that has done wonders to boost morale and employee support.

     “Our employees are the best in the business, and basically most come to American Security Mortgage and stay. We have longevity—people stay and even retire with us,” says Mahoney, the 63-year-old president and CEO of the company.

     The difference between American Security Mortgage Corp. (ASMC) and other mortgage groups is also the fact that they are mortgage bankers as opposed to brokers. Mortgage brokers traditionally receive any number of rate sheets for a vast array of mortgage products from wholesale lenders. However, mortgage bankers issue mortgages from their own bank account.

     Employees of ASMC closely watch pricing every day to stay competitive, and, they know their products. That’s what enables ASMC to secure and provide the most favorable mortgage financing products and pricing to meet the unique needs of each borrower customer.

      Celebrating 15 years of in the mortgage banking business, Abbott and Mahoney are proud of their book of business and the company’s strong referrals and repeat financing.

     They are at the top of their game. As a mid-size mortgage banker they are continually ranked in the top 10 of mortgage companies in the Charlotte metro area. Mahoney says it all began by paying their dues in the Carolinas’ corporate banking world and having a strong work ethic.

 

A Powerhouse Pairing

     Both Abbott and Mahoney began their mortgage banking careers upon graduating from college. They worked “in the trenches,” they are proud to say, calling on Realtors and homebuilders and assisting customers with mortgage financing.

     Chairman Jim Abbott was with First Union Mortgage Corp. for 34 years and from 1980 to 1995 as president and CEO. During his tenure, First Union Mortgage was generally ranked in the top 10 in the United States in home loan originations and loan servicing.

     Abbott had hired Mahoney straight after his graduation from East Carolina University in 1974, when inflation reigned and jobs were scarce.

     “I graduated on a Friday and was at work on Monday,” remembers Mahoney. “I actually had the job three and a half months before graduation. Just having a job during the recession was very lucky. I’d say 60 to 70 percent of those I graduated with didn’t have a job. My father also helped me with a strong work ethic—he worked 12 to 14 hours a day.”

     Mahoney’s stint at First Union lasted 10 years with Abbott serving as a strong mentor, good friend and occasional golf partner. Mahoney went on to serve for another 10 years at Wells Fargo as Southeastern U.S. regional loan production manager and later as group head of mergers, acquisitions and joint ventures.

     “At that time,” says Mahoney, “I was flying about 100,000 miles a year. Jim approached me and said, ‘Let’s start a mortgage banking business so you can see your son grow up.’ Frankly, that sounded very appealing. The banking corporate world had given me a great platform and experience, but I was ready for something different.”

     So in June 1999, the duo fronted the funding for ASMC and opened their doors in a 4,000-square-foot suite in the same glassy office building in SouthPark on Rexford Road in which they are located today. They had six employees.

     Today, the company employs 143 altogether—64 in their Charlotte headquarters and loan office and the rest in their other locations in Fayetteville, Gastonia, Hickory, Indian Trail, Jacksonville, Clayton, and Lake Norman.

     They handle residential mortgage lending in South Carolina, in Wilmington and Morehead City, and also have a satellite office in Northern Virginia. ASMC holds licenses in the District of Columbia, Maryland, North Carolina, South Carolina, Tennessee, and Virginia. They now occupy 18,000 square feet at their Rexford Road headquarters.

     Together, Abbott and Mahoney have been a good match. Both have served as president of the Mortgage Bankers Association of the Carolinas. Abbott also received the Distinguished Service Award in 1990 from the Mortgage Bankers Association of America, its highest honor.

     Given their breadth of experience, Mahoney says they are intimately familiar with all the lending and customer service components necessary for all parties in a home sale.

     Mahoney is also frequently quoted in area publications about the mortgage industry, and its highs and lows. In December, he served on a panel at UNC Charlotte about the current stabilization in housing markets across the country and the role played by the government takeover of Fannie Mae and Freddie Mac, as well as the Federal Reserve’s investment in mortgage-backed securities during the recession.

 

Finding Their Balance Quickly

     When U.S. home prices declined steeply after peaking in mid-2006, it became more difficult for borrowers to refinance their loans. As adjustable-rate mortgages began to reset at higher interest rates (causing higher monthly payments), mortgage delinquencies soared. Securities backed with mortgages, including subprime mortgages, widely held by financial firms globally, lost most of their value.

     “In 2008, frankly if you survived, you were lucky,” says Mahoney. “Only the truly good people made it. We had clean balance sheets, no repurchase risks. We found our balance quickly.

     “We understood that the world was changing and we had better be able to work within government regulations. We never ran our ship ashore. We’re smaller, more nimble, and we adapted quickly.”

     In response to stricter mortgage requirements that stem from the 2010 Dodd-Frank Act, Mahoney says his company is working hard to, as he says, “figure out the new system and work it.”

     “We’re a good size for Carolinas; nationwide we’d be small. We’ve probably added seven people just in compliance areas—just checking the checkers,” he adds. “The rules are just now being promulgated; the full effects are yet to be determined. It’s made credit more restrictive. But has it made mortgages impossible to get? No. People have to jump through a few more hoops now.”

     After the 2008 financial crisis, many mortgage lenders introduced guidelines that went beyond requirements for mortgages backed by the government. Some now appear to be relaxing those guidelines.

    Mahoney says, “The pendulum had swung too far. Now we’re just trying to find that equilibrium. As a matter of fact, we’ve even been able to drop the minimum credit score a number of points for a government-backed loan.”

 

Loyalty and Longevity

     Mahoney says loyalty and longevity are the two factors that contribute to employee buy-in to the mortgage banker. ASMC is doing its best to keep customers happy and to keep employee retention high. The principals believe happy employees who can process and approve loans at great rates and good credit scores make for loyal employees.

     The tone in the Charlotte headquarters is collegial. Three larger-than-life headshot posters of Mahoney are mounted in the hallway, his contribution to the office for hugs while he is traveling, he says, laughing.

     All three of them have been defaced with a red grease pencil. In one he is an angel with halo and feathered wings, in another he is a devil with horns, mustache and pointed chin; in the last one he is a pirate, complete with eye patch and missing tooth.

     “I’m not sure which one I like the best, but I hope they like that one,” he says, pointing to the angel. “We have tried to have fun, and when I say that I mean business fun.”

     During the real estate turndown last fall, ASMC laid off six employees. “Then we then went to our top-earning 18 employees and said, ‘Will you take a 10 percent pay cut so we have no more layoffs?’ And they did, and we did.

    “Those people were underwriters, supervisors, people in processing, closing, financial,” he says. “We allow people to have the whole story of what is going on here. We are good communicators. They gain real insight into this business.”

     And his favorite way to gauge employee success? “We have a litmus test for them. When I put my arm around them and introduce them to a customer, when that employee walks away I don’t have to apologize for them. That’s been very successful for us,” he says.

     “In this industry people tend to move around. The ups and downs of real estate finance and trends affect them,” Mahoney adds. “Look at the big banks—they have lost thousands of people in the last five to six months.”

     “If you look at our company, we have a lot of longevity. When people come here they tend to stay,” he says. “We offer an opportunity to move up, good pay and good benefits. They have the kind of jobs where when they wake up the look forward to coming to work. I truly believe that.”

 

Doing It Right

     American Security Mortgage doesn’t exactly rely on advertising for customers. Their one brochure for potential residential homebuyers is relatively spare. Web presence? They are everywhere, it seems.

     Their message: AMSC was founded on the core belief that home loans need to be handled by a team of in-house professionals and that by controlling each phase of loan processing, underwriting and funding, they are able to provide clients with exceptional customer service and on-time closings.

     They are strong words of promise, but they appear to be performing to them. Customers come to ASMC looking for variety of mortgage products, including conventional, jumbo, FHA, VA and USDA loans.

     Customers seem to be as loyal as the group’s employees. Kathy Adair of Charlotte says it was ASMC’s quick work and Mahoney’s attitude that spur on the popularity of the company. “I think Phil’s customers believe he is a fair and reasonable mortgage banker, and that is hard to find in this day and age.

     “Customers might not realize this, but he still uses common sense,” she says. “He is a very caring and compassionate man. His customers are his employees, his borrowers, Realtors, builders, and mortgage peers.”

     Abbott is very purposeful about the company’s vision: “To be recognized by our borrower, Realtor, and homebuilder customers, our employees and our competitors as the model of excellence in residential mortgage banking.” He encourages employees to keep that vision in mind at all times. By keeping it top of mind, he believes it helps employees to better participate and act on it.

     “We’re so grateful to be where we are now,” Mahoney says humbly. “There was a time when American Security Mortgage was an unknown. Although Jim and I are both fairly well known in the industry now, we still appreciate it when we pick up the phone and people allow us some time. We are so thankful to the people that have helped make it happen.”

     Mahoney doesn’t think ASMC will ever make the mistakes so many mortgage bankers made six years ago. “It’s obvious now that some of the Wall Street crowd thought they had they had assessed the risk in different types of lending, and guess what? They were wrong. They didn’t assess different types of risk,” he says.

     Both Abbott and Mahoney, and their hugging employees, see a brighter future in processing and underwriting home loans.

     “We will continue to expand the business until we hit our ‘sweet spot,’ which is a size that still allows us to know all of our employees and customers,” says Mahoney.

 

Kathleen E. Conroy is a Greater Charlotte Biz freelance writer.
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