Mortgage company expands into banking, changing name

While the nation’s real estate market is stalled or even moving backward, Flat Branch Mortgage, like the steam locomotive on the sign outside its office, is chugging along with a fully stoked boiler and is on track for expansion.

“It’s definitely getting busier,” Flat Branch owner Jim Yankee said. “Refinancing since the beginning of the year has been busy, but the purchase market actually has been incredible,” he said.  “In this last month, we’ve really seen the purchase business take off, with realtors getting busy again.  Despite the fact that rates are at record lows, and we’re doing a lot of refinances, 70 percent of our business right now is in home purchases.”

Flat Branch is a locally owned mortgage company with satellite offices in Moberly, St. Robert (near Fort Leonard Wood) and Warrensburg (near Whiteman Air Force Base). The company recently transitioned from being a mortgage broker into a full-fledged mortgage banker.

“We now underwrite, close, and fund all of our loans locally, in-house,” Yankee said.  “It gives us the ability to control the process, it allows us to get lower rates for our customers, and it allows us to follow through and make sure we meet all the deadlines because we control the process from start to finish.”

Located in an old gray brick warehouse at 101 South Fifth Street, a block from the old Katy railroad depot, the company has expanded to 18 employees from five employees when it began four years ago.  Yankee said the growth stems from its entry into government financing, with a new emphasis on VA, FHA and USDA Rural Development loans.  Unlike a standard mortgage brokerage, the company has developed into a full-service mortgage lender, underwriting loans just like banks do.  To reflect that change, Yankee said the company plans to change its name to Flat Branch Home Loans in May.

Yankee has lived in Columbia since the age of 12, graduated from Rock Bridge High School and Columbia College, went to work at Wells Fargo as an agent and then started his mortgage company in April 2005. Flat Branch Mortgage was initially housed across the street in a building shared with the Vangel marketing firm. The company moved about a year ago to its current location, a building that once housed the university’s Food and Agricultural Policy Research Institute and then Premier Bank.

Patty O’Brian, a local realtor consultant with House of Brokers, said she has known Yankee since he was a boy.  “I’ve watched his company grow slowly and professionally over the years, and I have numerous clients who have used him as their lender,” she said. “Their service has been outstanding, their staff people are excellent to work with, they’re courteous, and they’re on top of things.”

O’Brian said she’s found that Flat Branch provides a faster turnaround than other lenders, with quicker closings and pre-approvals for clients.  Much of that speed comes from the company’s ability to underwrite loans locally, said Kim Stanley, broker realtor with REMAX/Boone Realty.  She said Flat Branch reached out to her when she was first getting started and that she has worked with the company several times when dealing with first-time buyers.

“What most mortgage companies do is they take loan applications, they lock in the interest rate, and they overnight the file to an underwriter on the other side of the country,” Yankee said.  “You’ll come to XYZ Mortgage Co., your loan will close in the name of Chase, or Bank of America or whoever they are brokering to, so the loan is never in their name. They don’t control it, so if things get busy, or if that underwriter on the other side of the country has a big stack of files in line, you’re not always going to get the top attention.”

Today, Stanley said, transactions are much more complicated than they used to be, and Flat Branch keeps up with changes in the lending and appraisal arenas. What sets the company apart, she said, is its accessibility.

“There are other firms I’ve dealt with in town, some that have a national presence, and it is very hard to get a real human being on the phone, or it’s hard to get an answer because they have to deal with an underwriting department that is in another state,” Stanley said.  “It’s great having somebody who you can get hold of and get an answer from.”

While the main focus in recent months has been on customers wanting to refinance to take advantage of historically low rates, a recent surge in home purchases has Yankee growing more optimistic about the real estate industry and its effect on the future of the economy.  “Housing always leads us into a recession, and housing always leads us out of a recession,” he said.

The $8,000 tax credit for first-time home buyers, low prices and all-time low interest rates add up to a great formula for recovery, Yankee said.  “I don’t know how it could get any better,” he said.

In Columbia, prices are lower than they had been, but they didn’t drop as much as in the “sand” states of Nevada, Florida and California, where growth and speculators “flipping” properties lifted prices by 20 percent before the bubble burst, Yankee said.  In Columbia, builders built too many “upper end” homes that led to a glut of overpriced homes in the market, he said, leading to price reductions of as much as $30,000 today.

“It was a drastic market correction; it was the market going too good for too long, just like the stock market,” Yankee said, adding that there had never been a nationwide downturn in real estate prices since the Great Depression.  Downturns had always been regional before, so that lenders could take a loss in one region while making it up in another.

“There was an assumption that house values were always going to rise,” he said. “So even if you were taking on the risk of a bad borrower, you’ve always got the cushion of knowing that, even if they foreclose, you’re going to be able to sell the house, you’re going to be able to at least get what you have in it, or maybe even a little more, and cover the losses. When prices went down, that didn’t work anymore.”

While there have been a record number of foreclosures in Columbia – more than 300 last year – the rate is lower than other parts of the country. However, Yankee has witnessed a new trend, not visible in the past, of clients turning to foreclosure as an alternative, especially among those who are stuck making two house payments in a buyer’s market.

Flat Branch never engaged in the kind of risky loans that got lenders in trouble, Yankee said.  And mortgage lenders across the board are now smarter, he said, insisting on loans that are conservative and profitably underwritten.

Stanley said Yankee’s ability to attract experienced employees with good reputations in the industry shows his company is on the right track. “When many other businesses and people are hunkering down in this economy, he sees the opportunity, and he’s expanding.  Kudos to him for that.”