An Atlanta Recovery?

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The Southern city’s residential mortgage market’s comeback continues

By Don Sadler

Perhaps few metropolitan areas in the United States have experienced more boom-and-bust residential mortgage lending during the past decade than the Atlanta region.

New home construction and residential mortgage lending metropolis lifted like a rocket in the late 1990s and into the mid-2000s as the area, particularly its outlying suburbs, became a modern-day housing boomtown. But home construction and lending came to a grinding halt after the mortgage financing crises struck in 2008, sending the region’s unemployment rate into the stratosphere and its economy into the tank. The city—the country’s eighth most populous metropolitan region—stood as a major hub of the national mortgage crisis and has been among the slowest markets to recover.

So what is the state of residential mortgage lending in the region today? Are community banks ramping their mortgage operations back up?

Yes they are, according to the Community Bankers Association of Georgia’s President and CEO, Robert Braswell, echoing several Atlanta community bankers. “Home prices and sales have rebounded throughout the metro Atlanta region, and many community banks are now actively making home mortgage loans again,” he says.

According to Metrostudy Inc., a company that tracks housing and home construction activity in major markets nationwide, annual single-family housing starts in south Atlanta rose 28 percent in the fourth quarter of 2014 compared with a year earlier, while they rose 15 percent in the city’s more affluent north neighborhoods. Single-family home closings increased by 31 percent in the fourth quarter of 2014 from a year earlier in south Atlanta and rose by 20 percent in north Atlanta during the same 12-month period.

Meanwhile, annual construction starts in the Atlanta region increased by 18 percent and new home closings increased by 23 percent in 2014. Metrostudy forecasts slow but steady growth in 2015 due in large part to the improving job-growth picture in Atlanta, which ended 2014 as a metropolitan area with the third-highest number of new single-family building permits in the country.

Correspondingly, home foreclosure activity in Atlanta has hit a 12-year low, according to Metrostudy.

Returning to mortgage lending

In response to the area’s economic turnaround, Citizens Trust Bank, a $397 million-asset community bank in Atlanta, has ramped up its residential mortgage lending in a major way, says Yulanda Munford, the bank’s mortgage operations manager. “We’re seeing a drastic change in terms of both new home construction and sales of existing homes throughout Atlanta,” she says.

When the housing market went south, Munford says Citizens Trust Bank pulled in the reins on its residential mortgage lending. “We wanted to steer clear of the risk, and this decision kept us from realizing heavy real estate losses. But once we saw the market starting to turn—especially the falling rate of foreclosures—we jumped back in.”

Citizens Trust Bank returned to mortgage lending in 2013, Munford says, and has recently expanded its staff from one to five mortgage loan officers. The bank now offers a full menu of residential mortgage products, including conventional, FHA, USDA and VA-guaranteed mortgages.

Private Bank of Buckhead, a $247 million-asset community bank in Atlanta, has also made a renewed commitment to residential mortgage lending, reports the bank’s president and CEO, Charlie Crawford. The bank has expanded its mortgage division from four to 36 employees during the past year. In 2014, the bank originated 492 residential mortgage loans totaling more than $146 million in credit, up from just 127 loans in 2013 totaling about $51 million in credit.

“We’re now seeing more new home mortgages in Atlanta than mortgage refinancings, which hasn’t been the case the past few years,” Crawford explains. “But we wouldn’t have made this commitment [to considerably expanding the bank’s staff] if we didn’t think the Atlanta residential market was recovering nicely.

“We are bullish on mortgage lending in Atlanta.”

However, Crawford acknowledges that regulatory changes, particularly the new Consumer Financial Protection Bureau’s ability to repay mortgage regulations, have made it more difficult to be a small broker-only player in mortgage lending. That changing regulatory landscape forced Private Bank to decide whether to considerably expand its residential mortgage lending operations or get out of mortgage lending entirely, he says.

Increasingly, the price is right

Jim Guthrie, regional president, mortgage lending for State Bank and Trust Co., a $3.3 billion-asset community bank in Atlanta, remembers how the Atlanta residential market crashed hard during the housing finance crisis, and how the region’s mortgage lending has been slower to recover than other markets. But he’s still optimistic about the city’s current recovery.

“Right now the recovery is strong in both re-sales and new home construction,” he says. “The affordability index is well within range for most buyers, and there is limited supply and high demand for homes in the most desirable areas of town.”

State Bank and Trust also decided about a year and a half ago to make residential mortgage lending a major line of business, Guthrie says. The bank has budgeted a 300 percent loan-volume increase for its residential mortgage unit this year. “Before we were more of a boutique mortgage shop, but we saw an opportunity to commit to this business and grow it the right way,” he explains. “Our positive outlook for the Atlanta residential real estate market was a big factor in our decision.”

However, some community bankers point out that Atlanta’s more affluent areas are showing higher mortgage lending demand than the city’s less affluent areas. Braswell says the region’s tony North Fulton, Forsyth and Cobb counties are among the healthiest economic areas right now and have the area’s strongest mortgage demand. Two other counties, Gwinnett and Douglass counties, are showing especially strong mortgage lending rebounds due to the good reputation of their public schools as well as their relatively stronger job markets.

“It’s all about supply and demand,” says Crawford. “There’s less inventory and higher demand in town, while there tends to be more supply as you move further outside the perimeter.”

Braswell acknowledges that the CFPB’s mortgage regulations spawned by the Dodd-Frank Act have had a negative impact on mortgage lending by Atlanta community banks. “They have forced some community banks out of residential mortgage lending due to the higher compliance costs and increased liability, while some others are taking a wait-and-see approach.”

But Guthrie is quick to point out how the regulations aren’t deterring State Bank and Trust from its renewed mortgage lending. “We’ve come a long way since 2008,” he says. “Atlanta’s residential lending market is very healthy right now.”


Don Sadler is a freelance writer in Georgia.