At the moment, Midwest Mortgage Capital is a one-man temporary office in a Maple Grove medical building.
But the newcomer will soon expand. It's already hunting for staff and remodeling its new space in downtown Osseo, where it's scheduled to open Nov. 1.
The St. Louis-based independent mortgage banker is rolling out a welcome mat in the Twin Cities, undeterred by industry predictions for a tough 2014 and the fact that megabanks like Wells Fargo & Co. are trimming mortgage staff in the face of a falloff in refinance activity.
It's one of a number of independent mortgage companies moving into the state, drawn by the area's revved-up housing market and relatively robust economy.
"I'm hearing of a new company every week," said Patrick Martyn, executive director of the Minnesota Mortgage Association.
This is a big change from the years after the nation's housing collapse and the state's relatively fast move to crack down on unscrupulous mortgage lending that helped feed the foreclosure crisis. Mortgage brokers vamoosed, and many independent mortgage banks merged with depository banks or sold their assets to them.
"We're always going to be fighting that black eye," said Jeremy Redlinger, Midwest Mortgage's new branch manager in Maple Grove.
Redlinger, 33, said he worked for years as a mortgage broker and thinks mortgage bankers are now taking over their role. All the new mortgage underwriting rules make the broker model too problematic, he said. "A lot of it has to do with compliance."
Unlike mortgage brokers, mortgage bankers typically fund and underwrite their own loans. Neither take deposits.
Redlinger is busy now networking with the area's homebuilders and real estate agents. The sweet spot for Midwest Mortgage, he said, is loans in the $150,000 to $300,000 range across the metro area.
Much of the mortgage bank's business nationally comes via the Internet. Bankrate.com is a major source, said Jerry Frost, Midwest Mortgage's president.
With annual revenue of $10 million, Midwest Mortgage is a small albeit growing player. It makes conventional and government-backed loans using funds it gets from banks around St. Louis such as Jefferson Bank and Trust Co., then pooling the mortgages and selling them to banks such as Wells Fargo, U.S. Bank and Chase, which typically hold and service them.
The recent spike in mortgage rates hasn't affected its volumes, he said. "We see this as an opportunity, as others are cutting back."
Veterans in the local market say they're unfazed by the new elbows.
"When a lot of new people come in most of them will fail," said Erik Hendrikson, president of Edina-based Tradition Mortgage. "You just have to find out who is committed to having a long-term beachhead."
Hendrikson said he noticed the influx as refinance activity slowed and business for purchase mortgages picked up. There are new faces out courting real estate agents to score purchase mortgages.
"Even the newbies are getting kind of wooed a little bit," he said. "It gets kind of crowded in the real estate offices."