River Cities Business Journal: Business Profile

Today's News-Herald

LAKE HAVASU CITY - It would seem that now would not be the most opportune time to open a mortgage company.

In headline after headline, words like meltdown, crisis and mess have been used to describe the lending sector's current state of affairs. The term subprime, little more than industry jargon a year ago, has become part of Americans' everyday language - and for all the wrong reasons.

Despite that, at least one mortgage company has sprung up in Lake Havasu City in recent months, and another is preparing to open soon, signs that the ailing housing market may finally be turning the corner.

Becky Stark and Terrie Hoover opened Eagle Point Mortgage this past November. They acknowledged that the move raised a few eyebrows, yet they say the timing made sound business sense.

"We knew there was a lot of competition that was going under," Hoover said. "We thought it would be a good idea to start now while it is slow so that when it does start to pick up, we'd be set and ready."

The two began laying the groundwork for Eagle Point this past summer, the same time the subprime sector began to falter. Stark admitted that when the housing bubble burst, she and Hoover began to second-guess their decision.

"Of course it concerned us. Š We know this is a really strange thing to do," Stark said. "But we knew the market would come back, so we just decided to do it."

The two gambled that the industry would begin to stabilize by the time they opened their doors in November, a bet they say has paid off.

For months, lenders have been struggling through the housing slump and the credit crisis prompted by last summer's spike in defaults and foreclosures on subprime home loans made to people with past credit problems.

Many who want to buy a home have been unable to get financing because lenders stung by subprime loans have tightened qualification criteria. Meanwhile, other would-be buyers are reluctant to enter the market until signs of improvement emerge.

That, however, may be changing. "Buyers are looking, looking, looking and now they're starting to buy," Hoover said. "I don't have a crystal ball, but my gut feeling tells me over the next six months you're going to see stabilization. Š I think we're in the beginning stages of that turnaround now."

Those sentiments were echoed by Ginger Thornton, a mortgage lender preparing to set up shop in Lake Havasu City. Although Thornton acknowledged that the market was still "a little bit vulnerable," she said the housing pendulum was beginning to swing in the other direction.

Mortgage rates have fallen in recent months, spurring more interest among potential homebuyers. Thornton said those sitting on the fence are realizing that the price tag probably won't drop any lower.

She hopes to open her office, Platinum Bank, next month. The store will be a branch of Taylor Bean & Whitaker Mortgage Corp., a nationwide lending chain. Thornton plans to open two more branches in Arizona by the end of the year.

Though it's an uneasy time in the industry, that isn't necessarily a bad thing, she said. With so many lenders being laid off, she will have her pick of loan officers and other financial specialists. And of course, less competition usually means more business.

"It's a great time for us to be opening," Thornton said.