San Diego Business Journal

John Robbins, who launched two successful mortgage companies in San Diego, is back in the game.

Earlier this month, he announced the launch of Bexil American Mortgage Inc., operating both a wholesale division, which buys mortgages made by brokers, and a retail unit, providing home loans to consumers.

Robbins made an opportune decision to exit the mortgage industry in 2005 when he sold American Mortgage Network to Wachovia Bank for about $83 million. Within a few years, the nation’s housing market bubble blew up, leading to the financial crisis of 2008.

It was a combination of not adapting well to retirement, and a turnaround in the housing market that prompted his return, Robbins said.

“My wife told me I was flunking retirement, and I wasn’t ready to live on the golf course,” said Robbins, 64.

“I’ve never seen a greater opportunity in our business.”

Time is Right

Among the main factors influencing the decision to return to the industry are a 50 percent drop in the number of mortgage lenders, a return of affordable home prices, and interest rates reaching historic lows, he said.

Robbins lined up Bexil Corp. to back the venture. Based in New York, the holding company to a closed end investment fund and now the mortgage unit reported total assets of $36.5 million and a net loss through the end of September of $790,000, according to the corporate securities documents.

Bexil’s chief executive, Thomas Winmill, is one of three directors on Bexil American Mortgage’s board of directors, along with Robbins and Alex Rozek, an investment banker and managing member of Boulderado Group, a Boston based venture capital fund. Robbins declined to say how much Bexil is providing in capital or what his management team invested, but said Bexil would always be the majority owner.

Helping him launch the new mortgage business are many of the same management team involved in both American Mortgage Network and American Residential Mortgage, including Jay Fuller, Anna Martinez, Randy Myres, Suzanne Gonsalves, Muir Atherton, Hillary Griffith, Lisa Faulk and David Wallace.

“We literally have worked together so long we can finish each others’ sentences,” Robbins said.

Repeat Performance

From an initial group of nine, the company stands today at 43 and should grow to more than 100 by the end of this year, he said.

Although he declined to reveal the firm’s capitalization, Robbins said it would take at least $15 million to $30 million to start a new mortgage business these days. As for its warehouse financing, he said it will begin at about $60 million and should grow to $100 million quickly.

Initially, American Mortgage Network, the wholesale unit that is retaining the name of the old company, will be buying mortgages from brokers. It’s got licenses to do business in six states with applications pending in four others. The goal is to grow the business nationally to the levels of American Residential Mortgage (the first mortgage company that was sold to Chase Manhattan Corp. in 1994) and the former American Mortgage Network. Each business was averaging between $1 billion to $1.5 billion in monthly mortgage originations, he said.

Regarding the timing of the sale of AmNet in 2005, Robbins said the profit margins on loans it was buying then were getting squeezed and competitors were so eager to get business that they were losing money.

It was also an era of lax underwriting, allowing borrowers to lie about their income, and give little or no documentation about how they would repay the mortgage.

Robbins said he began warning others in the industry that the proliferation of subprime lending could lead to disaster.

“This couldn’t go on forever and if you looked at all the best models for real estate financing in the last 30 years … we knew we were headed for a storm,” he said.

Post-deluge, mortgage underwriting has become overly conservative, Robbins said. “The pendulum has swung so far the other way, it is prohibiting a lot of potential borrowers from coming into the market,” he said.

Mark Goldman, a mortgage broker with C2 Financial Corp. and lecturer at San Diego State University, said he was familiar with American Mortgage Network and Robbins’ reputation in the industry.

“He’s a proven talent in the industry, and he’s doing again what he knows best. … He’s been successful at it so why wouldn’t he keep doing it?” Goldman said.