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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
MAY 10-16, 2010
Middleburg Heights mortgage specialist sees turmoil as chance to grow New exec pumps $3M into Home Lending Source By ARIELLE KASS akass@crain.com
The Home Lending Source in Middleburg Heights is gearing up to grow.
Armed with a $3 million investment and a plan to add people and branches in the coming year, the mortgage company is eyeing the turmoil in its industry and looking forward to becoming a bigger player.
The company, which previously was known as Consumers Mortgage Corp. of Ohio, has a new executive team and is aiming to originate $60 million in mortgages each month. Its current volume is about $200 million in mortgage originations each year, or about $16.6 million each month. “We have a strong will to succeed
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here,” vice president Zubin Nagpal said. “There is an opportunity in the long run for a substantial market share in the mortgage industry.” Mr. Nagpal, with his father, Naresh Nagpal, made the $3 million investment in the company. Mr. Nagpal said he chose to get involved in the business because he sees consolidation in the mortgage industry and wanted to be involved as it changes. He also said it fit his and his father’s profiles as investors. His father joined the board of Home Lending Source but does not have an executive role. The younger Mr. Nagpal said his father is a serial entrepreneur who has had “phenomenal success” growing businesses and profitably scaling them up. The elder Mr. Nagpal was founder of hospital administration company Acute Care, which later merged with Inphynet Bone, Muscle and Joint Inc. and Omni Home Health Care. Zubin Nagpal, prior to his involvement at Home Lending Source, worked as a consultant at economic strategy consulting firm CRA International and private equity firm Nine Rivers Capital. Doug Reilly, the company’s CEO, said Home Lending Source has less than 0.1% of the nation’s mortgage business, but that new rules from the Federal Housing Administration requiring lenders to have at least $1 million in assets could knock nearly 98% of the country’s mortgage lenders out of the business. The old requirement had been $250,000, and Mr. Reilly said it will rise as high
as $2.5 million in the coming years. Mr. Reilly said combined with the state of the mortgage market, the new rules leaves room for companies such as his to grow. In addition to Ohio, Home Lending Source is lending in Arizona, California, Florida, Michigan and Tennessee. The 80-employee company is “very close” to opening offices in Colorado, Oregon and Washington, Mr. Reilly said, has plans for a branch in Charlotte, N.C., and opened three Florida branches in April. The majority of any new jobs, Mr. Reilly said, would be in Ohio as they support the new branches. Over the past year, the company has invested in infrastructure and systems, Mr. Reilly said. It added new compliance software, an accounting system, a new loan-origination system and a new pricing engine. While the company now sells its mortgages to banks such as Bank of America and JP Morgan Chase, Zubin Nagpal said, it is changing its business model to allow it to service the mortgages as well. “It’s a longer payback,” Mr. Reilly said. Over the past several years, Home Lending Source has kept to a “plain vanilla” approach, Zubin Nagpal said, allowing the company to make good loans and stay out of the trouble some other mortgage companies found themselves in. “It’s a really great time for us to move forward and grow the organization,” Mr. Reilly said. “We’re trying to keep a focus and look at the long term. We’re building a machine that’s scalable.” ■
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