Bucking the trend: metrocities mortgage founder Paul Wylie leads his company to continued growth despite a slowdown in housing sales by using a strategic joint venture program that provides loan prospects.

So far this year, home sales are down by about 25 percent nationally, but at Metrocities Mortgage, business is up by about 30 percent.

The recent performance follows a banner year last year, with closed loan volume up 57 percent to $10 billion compared to 2004. And although housing sales have slowed, and with them mortgage demand opt home purchases, the Sherman Oaks-based mortgage lender is banking on another strong turnout this year.

Metrocities founder and CEO Paul Wylie says the firm has bucked the latest trends as a result of a strategy put into place almost from the inception of the company.

Metrocities, which began operations in 1990, launched a joint venture program under which the company partners with real estate brokers, builders and other related home-buying service providers to offer inhouse mortgage lending services at the point of home purchase. The relationship provides Metrocities with a steady stream of loan prospects and the two entities share revenues from the partnership.

When Metrocities first launched its program in 1992, the company was one of only a handful pursuing joint venture relationships. But more recently, as the market for refinance loans shrinks, many of Metrocities competitors are seeking similar ventures.

Metrocities is still a relatively small player--Countrywide, the nation's No. 1 mortgage lender, for instance, wrote $491 billion worth of loans last year--but Wylie believes that the company's early entry into joint venture relationships along with its recent executive staff additions--five executives at the executive and senior vice president level have joined in the past two years; its menu of 7,000 loan products; and its process, which guarantees that a loan will close on time, will help it to compete.

Question: Most of Metrocities' business is in home purchase loans rather than refinancing. How are you managing such strong loan volume increases in a slowing housing market?

Answer: Through planning, and the planning goes back a long way to the point where we decided to be in the joint venture business. And that's what we focused on as a company is creating those relationships, and that gives us steady growth.

Q: What were some of the dynamics that led you to launch your joint venture strategy back in 1992?

A: When we started in 1992 it was a refinance year for the mortgage industry, and it was a heavy refinance year in California. So we looked at our closed production in 1992 and we were running approximately 80 percent refinance business and 20 percent purchase business. And we looked at the historical numbers and they were almost the exact opposite. So we said even though we're successful and we're making money, what we wanted was longevity and stability. So we set out to have a strategy where we would do more purchase business. The first one we went after was Fred Sands Realtors (since acquired by Coldwell Banker).

Q: Now you're in a market where everybody, including folks as big as Countrywide, is trying to establish these relationships. How are you able to establish a difference that makes people go with you?

A: This is our primary focus. This is our passion. And we have experience in doing this. And we have what we believe is the best talent to accomplish our goals and objectives. We have eight people who have run a lending entity as an in-house entity for a top 10 real estate company or builder.

Q: Did you plan to eventually move into direct lending when you founded the company as a brokerage?

A: No. During those refinance cycles the lending industry was very inefficient. This goes back to pre-automation. Being a mortgage broker we would submit loans to other institutions and, like other mortgage brokers, get in line for them to be underwritten and decisioned and then get in line for the conditions to be reviewed and signed off and get in line for the loan documents to be generated. We could not guarantee to close on time, and we accelerated the mortgage banking aspects we could guarantee the results.

Q: Is it an advantage to be a direct lender and a mortgage broker?

A: One of the ways we differentiate ourselves compared to some of the larger providers is that we do provide mortgage brokering services. As a direct lender, we have our own proprietary products and underwriting guidelines that meet the majority of consumers' needs. But there's still a significant portion where we will go ahead and provide the products of the large aggregators of loan servicing (like Countrywide) as well as the Wall Street firms. We can offer all those household names and programs as well as the Wall Street firms because they've become so dominant in the alternative products and jumbo products. So there's tremendous choice.

Q: The housing market is widely expected to slow considerably this year. What are your expectations for 2006 and how do you intend to counteract the general trends?

A: We continue to add on average two joint ventures per week throughout the U.S. We're close to 180 venture partners now. So our expectations are that we would be up around 250 by the end of this year.

Q: Are you expecting to see a consolidation in the mortgage industry now that home sales and prices are flattening out? Are you looking to be a consolidator?

A: We are a potential consolidator. Again being a relationship-based lender, if the right company were to come along that is focused on relationships that we deem would be a good culture match with our company then we would be a consolidator.

Q: Are you actively looking to make acquisitions?

A: We're not looking, but we are open. When opportunities come our way then we evaluate, but it is not our focus to be a consolidator.

Q: Some of your large competitors locally have said, we have jobs that don't require they be housed here, and they've sent them where the cost of doing business is cheaper. What's your take on that?

A: It is challenging for all employers to have a large number of employees in California. We are committed to California and we additionally have regional centers in other parts of the country, and we will continue to add to the staffing there as business dictates. So we will continue to add to California jobs as well, but we're looking closely at the costs.

Q: Where are your regional offices and what expansion are you planning in that portion of your operation?

A: We're in Charlotte, North Carolina. Scottsdale, Arizona and Pleasanton, California in addition to Sherman Oaks. Selectively we anticipate adding additional regional centers. We try to minimize the number of regional operation centers. Our approach has been to have regional operations centers but with the service level commitment and with the talent and with the technology to where people in the field and people referring to people in the field are supported.

Q: How did you get into the mortgage business?

A: I was buying and fixing up and selling real estate and relying on other people (for mortgages). I was always interested in real estate, and I had people arranging financing for me and I wasn't always satisfied with what they were doing. So I got started as a loan officer. Then the company grew in different ways and went through some management changes and I was no longer comfortable with the environment I was in. I actually went looking for an environment that I would be comfortable in and didn't find a good match and as a second choice, there were three of us, and we decided to go ahead and open up our own company.

Snapshot 

Paul W. Wylie

Title: CEO, Metrocities Mortgage

Born: 1952, Detroit

Education: Attended Michigan State University 

Personal: Married, two sons

Career Turning Point: Getting into the mortgage business.