Home » About Us » In The News

About Us

Page Tools: Email | Print | Bookmark

In The News

GAINING SHARE, KEEPING IT 'FUN'

Glenn Stearns, the founder and CEO of the 20-year-old mortgage firm that bears his time, is a self-described "easy going" guy. In a recent interview he laid out his basic philosophy about the industry like this: "This business is too crazy to take seriously. We like to have a lot of fun."

Lately, it appears that Santa Ana, Calif.-based Stearns Lending is having plenty of fun. It's the fastest growing lender in America with a fourth-quarter origination growth rate of 140% ($1.8 billion in fundings). Over the past two months it has opened 15 new retail outlets and several wholesale offices, including new beachfronts in the mid-Atlantic and Northeast.

But a few years ago, if you uttered the firm's name at a mortgage meeting outside of California, it would be met with blank stares. It was hardly a player in national circles. Now, it ranks 25th among all residential lenders in the nation and 13th among wholesalers, not bad for a nonbank whose owner barely escaped Towson State University in Maryland with a 2.1 GPA.

"I came West with a friend of mine in a car," he said. "I was sitting on the beach one day, staring at the houses, thinking, 'I love this place. I want to stay.'" That was back in 1988. One of his first jobs was waiting tables. From there he graduated to loan officer. "After 10 months in the business, I started my own firm."

On the surface it may appear that he's had an easy ride of it, but he's also the first to admit that the company almost went under a few times, only to revive and grow while others around him faltered. "Back in 1998 and 1999, those were rough years," he admits.

It was also during the time of the industry's first "subprime crisis," an epoch characterized by first growing nonbanks that grew rapidly by borrowing heavily from Wall Street while selling their loans to such firms as Bear Stearns and Lehman Brothers. (A central difference between the subprime debacle of 1998 and the current one is loan underwriting. Back then, low LTVs were the norm.)

For the most part, Stearns avoided subprime lending (then and now) and stuck to its knitting: Fannie Mae, Freddie Mac and FHA-backed loans. (It also diversified by branching out into appraisals, settlement services and related loan functions.) While subprime boomed, Stearns Lending retrenched. Its owner didn't like the product though he admits he dabbled in alt-A a bit only to get out before the market crashed.

All the while, he waited. "I knew all of the B&C guys," he says. "They were all based here." In 2007 when companies like SCME Mortgage Bankers began to fail under the weight of loan buybacks from the very same Street firms that bought their loans, Stearns Lending pounced. It began swooping up the staffs of dozens of firms, hiring their most experienced loan officers.

"When bigger companies retrenched and left the industry we just took over their production teams," he explained. "I picked up an SCME team that had been together for 10 years." The cost to Stearns Lending was zero. "We just hired the people and took over their leases. I think that's a pretty good business model."

In 2007 Stearns Lending employed just 80 full-timers. Its pipeline was running dry because nonprime ruled the landscape. Then the B&C market cracked up. Hundreds of experienced mortgage workers needed jobs. "How could I not take advantage of these great teams?" he asks.

This year it crossed the 1,000-employee threshold and has an office building in Santa Ana with the Stearns name on it. Even though the company has hired many outsiders, he likes to brag that most of its executive team has been with him for 16 years or more.

What's next for the company? It plans to launch a new correspondent program next month, buying loans from larger shops. It has an $800 million servicing portfolio and would like to grow that business as well. It also has its eye on the jumbo market.

As for its warehouse backers, five firms provide credit to Stearns Lending. Asked which ones, he declined to name them. "Maybe I'm a little paranoid but I'd rather not," he said. But he was happy to add that his company is getting plenty of offers for new lines. And yet, he's still careful. Stearns is, by no means, a publicity hound-though he did make the California newspapers a few years back when he became the first winner of "The Real Gilligan's Island" on TBS, a reality show. (He donated his cash prize of $250,000 to charity.)

Asked why the mortgage industry hasn't heard more about Stearns Lending, he offered, "We've attempted to lay as low as possible. When magazines start calling, I guess I should become wary. When you start climbing the ladder that's when your head gets cut off."

Media Contact

For Press and Media contact Laurie Baker Lbaker@stearns.com