Arvest Still No. 1 in Arkansas, Cornerstone Closes Shop

Arvest Mortgage Co. of Lowell remained atop the list of the state’s largest mortgage lenders during a strong year of activity. However, the favorable market is still overshadowed by a stifling regulatory climate.

Little Rock’s Cornerstone Mortgage is no more after it closed in mid-October. Most of its staff joined IberiaBank Mortgage Co., the second-largest mortgage lender in the state with a 2012 mortgage volume that topped $509 million.

Michael Powell, Cornerstone co-founder and president, said the continued market flux and burdensome compliance issues became too much to cope with.

“I wasn’t sure what was going to come out of that,” said Powell, now executive vice president and production manager with IberiaBank Mortgage in Little Rock. “There were a lot of unknowns. I battled with it until the end. We were profitable up until the very end.”

Cornerstone, the largest independent mortgage company in Arkansas, became a casualty of the post-bubble fallout afflicting lenders nationwide.

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“You’ve got to have more people to handle all the regulator’s rules and regulations,” Powell said. “I didn’t have the staff to handle all the new regulations. We needed our own internal quality-control compliance person, and on top of that, the investors are getting so picky on the loans they purchase. It was too much risk for a small lender to absorb.”

Talks about joining forces with IberiaBank Mortgage began about three years ago and grew more serious as the mortgage business became more onerous in the new post-meltdown world. Having the support staff of a larger growth-minded mortgage lender proved too attractive.

“The leadership of Chuck Quick [president and CEO] and David Bryles [executive vice president and chief operating officer] has taken it to the next level,” he said.

Powell’s decision to shutter Cornerstone after 13 years of business positioned Little Rock’s Carroll Mortgage Group Inc. as the state’s largest independent mortgage company.

“He went to the dark side,” quipped Jim Carroll, president of his namesake firm. “We’re still fighting the big banks.”

Carroll Mortgage ranked No. 18 among Arkansas mortgage lenders with a 2012 loan volume of $65.5 million.

Carroll, a 39-year veteran mortgage lender who started his own business in 1995, appreciates Powell’s frustration with the new landscape. Dealing with underwriters often can turn into a slog through shifting sands of regulatory interpretation.

“It’s not as fun as it used to be,” Carroll said. “We get referrals all the time from customers who can’t get their loans done with the big banks.

“They’re all risk averse, and they’re scared of regulators. They’re also scared of making loans. The way they’re going about [fixing] it is counterproductive. They’re being so inconsistent.”

Bank of America’s mortgage operation in Arkansas went dormant in 2011 as the financial giant devoted its resources to sorting out and reorganizing its mortgage operations nationwide.

Josh Neal, who left in 2010 to join U.S. Bank Home Mortgage, was among 13 top producing mortgage lenders who left Bank of America during the corporate reshuffling.

Neal was rehired in 2011 and charged with helping rebuild BOA’s mortgage lending operations in Arkansas. That restaffing effort began with three associates and has climbed to 10.

“We’re still dealing with the challenges of last year,” Neal said. “This year, we’re going to get out and hire more.”

Bank of America Home Loans reappeared among the state’s largest mortgage lenders at No. 23, with a mortgage total of $52 million.

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