Stonegate Seeks to Turn Cash Buyers into Jumbo Mortgage Borrowers

Mortgage & Real Estate









Stonegate Mortgage Corp. is expanding into New York and Massachusetts as it seeks to increase its originations of nonagency jumbo loans and lays the groundwork for its first private-label securitization.

The Indianapolis-based mortgage lender has been operating in California and the Virginia/District of Columbia market for less than a year, according to Stonegate chief executive Jim Cutillo. He expects to be licensed in New York and Massachusetts by the end of this year.

The CEO noted during a presentation at a Barclays financial services conference Monday that it is sourcing prime jumbos through its retail and third-party origination channels.

Stonegate is targeting cash buyers who want an interest-only 5/1 ARM. “They will pay cash if they can’t get that product,” he said. The lender will also originate loans for high-price condominiums that are not approved for Fannie Mae and Freddie Mac loans.

High-balance loans of $417,000 to $750,000 are the “sweet spot,” Cutillo said, but his company will fund larger loans. He believes cash buyers can be encouraged to take out a mortgage on their homes. “We believe that is something that can be done.”

Stonegate also funds and originates Fannie, Freddie and Ginnie Mae eligible loans. In the second quarter, it originated $3.3 billion in single-family loans, up 44% from a year ago.

Meanwhile, the nonbank lender is looking forward to doing its first PLS securitization “sometime in the near future.” Stonegate has lined up 11 investors that want to buy its interest-only securities.

“The nonagency business is growing and we believe that presents the biggest growth opportunity for us,” the CEO said.

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