Mortgage firm closures hit isle offices
Despite the third closure this month, positive signs have emerged in Hawaii
As mainland firms close their mortgage companies, their local operations in Honolulu are left scrambling to find new financial backers for their loans.
BNC Mortgage at 700 Bishop St. is the latest victim of the subprime lending implosion. BNC's parent company, Lehman Brothers Holdings Inc. of New York, yesterday became the first Wall Street firm to close all 23 offices, including the one in Honolulu.
An employee who answered the phone at the Honolulu BNC Mortgage yesterday referred all questions to the New York office, which did not respond by press time.
Donald Lau, president-elect of the Hawaii Association of Mortgage Bankers, said there was no cause for panic here in the state.
"Hawaii is one of the lowest in the nation in foreclosures," said Lau. "I don't think Hawaii is going to see a lot of foreclosures. In general, people with loans outstanding won't be impacted as long as they make their payments and have jobs."
While there may be fewer options for lenders than during the housing boom, the mortgage market is really returning to normal and should remain stable, Lau said. The market will return to more conservative loans for qualified buyers, without all the exotic type loans that were available before.
But compared to Florida, California, Texas or Colorado, he said Hawaii is at the bottom of the list for foreclosures, and Hawaii's real estate is still holding its value.
From a mainland perspective, the Hawaii market is also very small, he said. For a firm like Lehman Brothers, Hawaii would just be "the tip of the tail."
The firm's closure of its BNC Mortgage subsidiary affected about 1,200 employees. Lehman said it would continue making home loans through its Aurora Loan Services LLC unit.
Last week, Charter Funding of Hawaii, the retail lending arm of First Magnus Financial Corp., also closed its doors after the Arizona-based parent announced it would be shutting down operations. This week, First Magnus filed for bankruptcy protection.
But David Quandt, Charter's vice president and regional manager, said it is being courted by three prospective new owners, and that he was expecting to make a decision by the end of this week.
Charter Funding, with seven offices in Hawaii, was not a subprime lender. First Magnus blamed its downfall on the collapse of the secondary mortgage market.
A sign of hope already has emerged for the Hawaii operations of New York-based American Home Mortgage, which announced earlier this month it would be closing its five isle offices down.
The phone recording at American Home Mortgage's 747 Bishop St. office now says: "Aloha! It's a beautiful day at IndyMac Bank, Honolulu branch."
American Home Mortgage's Honolulu branch manager, Mark James, told the Star-Bulletin Aug. 3 that IndyMac Bank of Pasadena, Calif., was planning to acquire the company's western division.