Posted by Todd Rubick on
At a time when many have fled the mortgage industry, Thompson Kane & Co. is jumping in.
Started this year by financial professionals John C. Thompson and Bradley T. Kane, the new mortgage bank hopes to take advantage of the decline in large nationwide home lenders since the residential real estate bust occurred six years ago.
With a clean-slate loan portfolio and new capital, Thompson Kane & Co. is offering mortgages to a housing sector that, although still weak, is slowly improving and expected to grow.
"It's a contrarian play. At a time when so many people have headed for the hills, it's created this opportunistic void that just needs to get filled," said Jeff Rusinow, an early-stage investor from Wisconsin who is the new company's lead investor and a member of its board of directors. "It's an industry obviously that's in major upheaval, and Thompson Kane is starting fresh."
There's no question the home lending business has shrunk. The total number of employees in the mortgage industry in the United States is down almost 50% from its high of 505,000 in 2006, according to data from the Bureau of Labor Statistics. Meanwhile, big mortgage lending names such as Washington Mutual, Countrywide and Golden West have disappeared.
"I'm of the opinion that the housing market is stabilizing and there's certainly also a refi wave going on right now due to the low interest rates," said financial industry analyst Thane Bublitz, of Thrivent Asset Management in Appleton, speaking generally. "It seems like there would be mortgages out there that could be originated. It certainly seems like there is an opportunity to get involved."
Thompson, too, thinks the housing market is stabilizing and will bounce back over time.
"It's an industry that back in '06 originated roughly $4 trillion of new mortgages, and last year it was about $1.1 trillion or $1.2 trillion," Thompson said. "So it's fallen a ton. Yet we still all have homes, we still all need homes. I'm very confident over the next 10 to 15 years it will not only reach that $4 trillion threshold, but I would think it will surpass it in terms of annual originations."
From 1993 to 2009, Thompson was president and lead manager of the equity and fixed-income portfolios at Thompson Plumb Funds Inc., where he was responsible for attracting and managing more than $2 billion in assets.
In 2009, he founded and led a mortgage insurance company that since has been sold and now is known as NMI Holdings Inc. Since 2010, he has been CEO of Vilas Capital Management, a hedge fund management firm.
"I saw a big opportunity in the mortgage space develop," said Thompson, who is Thompson Kane & Co.'s chief executive.
Kane, the president of Thompson Kane & Co., has more than 22 years of experience in financial services, including about 12 in mortgage originations. In 2001, he founded the residential mortgage brokerage firm B.T. Kane Group.
Among members of their management team is John Walrath, a former director of mortgage banking for the Wisconsin Department of Financial Institutions, the state's banking and investment regulator. Walrath is Thompson Kane's chief compliance officer and director of quality control.
Thompson Kane & Co. was required by regulators to raise $250,000 in order to start the mortgage bank, but it ended up raising more than $2 million, Thompson said.
Funding for loans will come from the mortgage bank itself and from lines of credit with commercial banks, Thompson said.
Thompson Kane is originating mortgages that could eventually be sold to Fannie Mae and Freddie Mac.
Right now Thompson Kane's market is Wisconsin, but it plans to expand into Missouri, Illinois, Iowa and Minnesota over the next year or two, Thompson said.
"Over time, I think we could go national," he said.
Thompson Kane has about 12 employees and already is making loans.
"We don't have any residual risk from the past," Thompson said. "This is a brand new entity with great people, fresh capital and no hangover."