A mortgage branch of a big Aussie bank is exporting an intriguing new mortgage product to these shores. Starting out with wholesale and correspondent business, this lender is targeting quality borrowers in high-end markets. BY STEVE BERGSMAN
Mary Lou Wait, a loan specialist with Allied Mortgage Services Inc. in Saratoga Springs, New York, was attending an industry trade show in September 2005 when she began chatting with a group of people from Jacksonville, Florida-based Macquarie Mortgages USA. * "They were talking about flexible mortgages and asset-management accounts," says Wait. "The conversation wasn't about interest rates, but interest costs and how you can flow your money." * For Wait, it was love at first sound bite. Parsing her phrasing most passionately, she gushes, "I fell in love with the Macquarie mortgage concept." * In January 2006, Wait sold her first Macquarie mortgage, and by spring of this year 90 percent of her business was Macquarie mortgages. That was just the beginning. She also took a Macquarie mortgage on her own house. * "One of the most satisfying aspects of my business is that when we go in and present to a broker or correspondent, almost without fail one of the principals takes a loan," notes Linda Henley, chief executive officer (CEO) of Macquarie Mortgages USA, the residential mortgage arm of Sydney, Australia-based banking giant Macquarie Bank Ltd. * Henley, herself, took a swoon when the Sydney bank came knocking.
As Henley tells the story, she was sitting in her office as head of correspondent lending for JPMorgan Chase & Co. in Jacksonville, Florida, when someone with an Australian accent called from Macquarie Bank. "That automatically perks your ears," she laughs. "My first assumption was that he wanted to talk about becoming a correspondent with Chase. But he said no, he wanted to talk about opportunities at Macquarie."
After researching Macquarie Bank on the Internet and quickly understanding the innovativeness of its product, Henley was intrigued. "It just sort of gets in your blood," she says. Henley, too, has a Macquarie mortgage on her house.
The Australian twist
For people introduced to a Macquarie mortgage, there is usually a period of extended confusion followed by a "gotcha" moment-which is, of course, when they realize how different and, more important, how useful the mortgage can be.
"Once they grasp the concept" is a phrase used often by people describing the first date between the mortgage broker and the Macquarie borrower.
"Quite honestly, you have to go through the mortgage a couple of times to understand it-but once you do, it is like, 'Wow! This is something that definitely is unique,'" exclaims Holly DeWitt, first vice president of Metrocities Mortgage LLC, a Sherman Oaks, California-based mortgage banker.
Metrocities began offering Macquarie mortgage products in January 2006. "They approached us at a conference," says DeWitt. "We took a look at their product and decided it was something we would like to offer to consumers."
Even with all the residential mortgage variations introduced in the past decade, the basic mortgage is still the workhorse 30-year, fixed-rate loan. When consumers secure a traditional 30-year, fixed-rate mortgage, they begin paying it down on a monthly schedule. The monies that pay off the loan are never seen or touched again. The check is written, the money gone.
With a Macquarie mortgage, the capital from those monthly payments can be accessed at any time over that 30-year period, because it becomes the foundation for a kind of assetmanagement account. Instead of the mortgage being a liability, it becomes a useful asset.
The Macquarie Asset Manager(TM) combines an interest-only (for the first 10 years), variable-rate loan with a home-equity line of credit (HELOC). Here's the way it works: Let's say a couple's mortgage is currently $300,000 on a house valued at $500,000, but the couple wants to buy a second home with a down payment of $100,000. …