Brian Damico, President and CEO of New Fed Mortgage in Danvers, Mass., was going to be a financial advisor, but was offered the opportunity to run a new, six-person mortgage company in 2000. He accepted the position, but the employees never materialized. That meant he had to learn the business from scratch. But Damico did have a background in residential and commercial real estate, so he knew the business, just not mortgages. Today New Fed Mortgage originates $25 million of loans each month and does retail business in all the New England states, except Vermont as well as New Jersey and Florida.

The Mortgage Leader spoke with Damico about his decision to expand his organization, the types of people he prefers to recruit and an acquisition he's in the process of making.

What type of loans do you specialize in?

Everybody has the same products. Conventional we have really strong rates. We offer Federal Housing Administration, Department of Veteran Affairs of Agriculture and Department loans. We do all of these as products in-house, so we have underwriters that will approve them. Back in the day we would have had to send those out and wait a week or two. But now we control the whole process.

Why have you chosen now to expand New Fed?

Through the years, I never felt we were ready for growth. At one point we had a lot of loan officers, but it was before licenses [were required], and it was a different world. To really put your best foot forward and go for growth, I felt we needed all of the programs to be a full-fledged lender. And we have had all the programs for the last two years, so now we are ready to grow. We made sure we had the right people, in the right places.

How many people have you hired over the past year?

We’ve hired 25 people over the past 12 months, though 17 of them were hired in the last six months. Also, we have grown to six branches, from four, and we are looking to add more branches. It gets our footprint a little larger and we can recruit people where the branches are located and keep trying to build more volume in each branch.

What types of people do you look for when you are recruiting?

Culture is everything. I’ve hired big producers in the past. The question is are they all about themselves? Over time, I’ve gotten good at identifying people where there is a fit. While I wouldn’t automatically say, “No to someone that’s never been in the mortgage business, I love the idea that experienced people bring a book of business and clientele. It makes it easy to grow. It’s a people business, so we always try to recruit the best operations and sales people that we can.

What’s next for the organization?

We plan to open an Internet, or direct to consumer channel. To do that, we are in the middle of purchasing another mortgage company that does business in Illinois, Virginia, Maryland and Pennsylvania. This way the channel does not compete with New Fed’s retail branches. We are hiring staff to run that business.

The U.S. loan delinquency rate for loans 30 or more days past due, but not in foreclosure is 3.71%, and a year over year change of -18.53%, according to Black Knight Inc.'s  "first look" at November 2018 mortgage performance statistics. The data is derived from loan-level database representing the majority of the national mortgage market, which the company collects.

Total U.S. foreclosure pre-sale inventory rate: 0.52%
Month-over-month change: -0.22%
Year-over-year change: -21.95%

Total U.S. foreclosure starts: 45,200
Month-over-month change: -10.67%
Year-over-year change: -5.44%

Monthly prepayment rate (SMM): 0.66%
Month-over-month change: -14.95%
Year-over-year change: -33.00%

Foreclosure sales as % of 90+: 1.78%
Month-over-month change: -8.92%
Year-over-year change: 11.48%

Number of properties that are 30 or more days past due, but not in foreclosure: 1,925,000
Month-over-month change: 41,000
Year-over-year change: -399,000

Number of properties that are 90 or more days past due, but not in foreclosure: 510,000
Month-over-month change: 11,000
Year-over-year change: -156,000

Number of properties in foreclosure pre-sale inventory: 268,000
Month-over-month change: 1,000
Year-over-year change: -69,000

Number of properties that are 30 or more days past due or in foreclosure: 2,193,000
Month-over-month change: 41,000
Year-over-year change: -468,000

Top 5 States by Non-Current Percentage

Bottom 5 States by Non-Current Percentage

Top 5 States by 90+ Days Delinquent Percentage

Top 5 States by 6-Month Improvement in Non-Current Percentage

Top 5 States by 6-Month Deterioration in Non-Current Percentage

The housing market will continue to slow in the first six months of 2019, available inventory will rise, and prices will increase, though at a slower rate than has been the case for years, according to Seven Predictions for the Housing Market, a report from Redfin. House-flippers will exit the market, and issues between technology firms and local governments will continue to be problems.

"We predict that the housing market will continue to cool into the first half of 2019," said Redfin chief economist Daryl Fairweather, who authored today's report. "Inventory will return to 2017 levels, and price growth, while likely still positive, will be the lowest we've seen since 2014 or possibly even 2011. Investors and house-flippers will back away from the cooling market, and real estate companies that buy homes from consumers to quickly sell at a profit (including our own RedfinNow) will face their first serious test. Tech companies and local governments will continue to go head to head on local housing issues."

Redfin's seven housing predictions for 2019 are as follows:

1. The housing market will continue to cool: Price growth settling around 3 percent in the first half of the new year, down from 7 percent in the first half of 2018, but there is a real chance prices will fall below 2018 levels. A still-growing economy and increased access to credit will support more homebuyer demand, but higher interest rates will make home-buying more expensive, so it's hard to say whether home sales will stay down or rebound next year.
2. The homeownership rate will continue to rise: Homebuyers will enjoy more inventory and less competition from speculators and house-flippers, which will lead to more people enjoying the benefits of homeownership. Homeownership has been consistently growing from its post-recession valley of 63 percent in 2016 to above 64 percent this year. We predict the homeownership rate will grow more rapidly next year than it did in 2018.
3. It will cost more to borrow, but more people will have access to credit for home-buying: A mortgage-rate increase to 5.5 percent by the end of 2019 from the less than 5 percent level where rates have been hovering in recent months would mean about a $100 increase in monthly mortgage payments on a $300,000 home. Lenders will also feel the effects of rising rates, which will increase their costs of lending and dampen demand for their services. This will motivate lenders to expand their customer base to low-income borrowers and first-time homebuyers. But of course, lenders will charge more for these loans--both to cover the risk of lending to borrowers with less-than-perfect credit and to cover their own costs of borrowing.
4. A cooling housing market will dampen economic growth only slightly: The economy will most likely grow, but a cooler housing market will contribute less to the overall economy. Even if residential investment (which includes money spent on construction, renovations, and real estate commissions) were to fall by 10 percent, total economic activity would be impacted by 1 to 2 percent. That isn't enough to cause a recession as long as the rest of the economy keeps growing.
5. Fewer homes will be built, but more builders will focus on starter homes: Homebuilders will be more cautious about building during a cooling market and focus on building starter homes that are easier to sell than luxury homes. The per-unit value of single-family residential building permits has already flattened, and we predict per-unit values of building permits will decline in 2019. Another factor in 2019 will be low unemployment, which will finally cause wages to rise for low-income workers. This will impact both the supply of and demand for housing. On the supply side, higher labor costs will limit the number of homes built. Meanwhile, higher wages will be a boon to demand for starter-homes among working-class Americans.
6. Institutional buying will face its first serious test: If home-buying demand falters due to higher-interest rates and stock-market volatility, institutional buyers who made money from almost every sale in a rising market with low-interest rates could start to face losses or might demonstrate more discipline than other housing investors. If i-buying works in a bear market as well as it has in a bull market, instant offers could become a major, permanent sector within the real estate economy. If it doesn't, investors will lose money.
7. Tech and local government will go head-to-head on housing: Cities have been struggling with the double-edged sword of tech-company-driven prosperity and inequality. Growing cities will have to start building more housing now if they don't want to face the affordability and homelessness problems that established tech hubs like Seattle and San Francisco face.