Kevin Reilly has been in the mortgage business since 1985, and has seen his fair share of ups, downs and trends. He started his own business, Consolidated Mortgage, in 1989, during the last housing recession.

“It was a tough time to start, no question about it,” he said. “It was a similar – not quite as bad – but a similar climate to what we’re witnessing today. But it was a good time to get into the industry and, 19 years later, here we are.”

In January, Reilly’s company joined two others, Patriot Funding and Residential Mortgage Group, and merged with Covenant Mortgage. Reilly sees the consolidation of independent mortgage brokerages as the newest trend as companies struggle to comply with new regulations and stay in business during the recession.

Reilly has been a New England Patriots season ticket holder since 1991, enduring the dark years up through three Super Bowl victories. Reilly has been to every Patriots Super Bowl, but still isn’t ready to talk about the painful 2008 game. The New York Giants prevented the Pats from making history, beating them in the final minutes of the game, and crushing their bid to go 19-0.

“I can’t talk about that one,” Reilly said. “My doctor told me not to.”

Kevin Reilly

Title: Managing Director, Covenant Mortgage

Previously owner and principal of Consolidated Mortgage in Quincy for 19 years

Experience: 24 Years

How did your merger with Covenant Mortgage play out?

I’ve known Jim Picciotto of Patriot Funding, and Brian Fogarty over at Residential [Mortgage Group] for awhile. Misery loves company, and we were talking about the industry changes and what was coming down the road, and we thought it was a good idea to merge the companies. There is a lot of experience [between the three of us], and we all seem to have the same values about our mortgage companies.

We were contacted by Charlie Ferraro of Covenant Mortgage, who heard we were getting together and he contacted me about possibly merging into Covenant.

I have a lot of respect for Charlie, he’s been in the industry for many years, and we met over the course of four to six weeks, and we ironed out a deal for us to come aboard with Covenant. We found out that they are well-capitalized, they have a warehouse line of over $50 million, and it just seemed like it was good move for us. Liquidity is not readily available these days, so we’re fortunate to be able to align ourselves with a company who has it.

How has the change affected your business?

The integration has been a little difficult, as we’re in a little mini-refi boom, but it was a good way to start. We’ve got good people. Covenant Mortgage’s secondary department and their staff in operations are great people to work with.

Do you feel a loss of independence after the merger?

One thing that we all talked about when we talked about merging with Covenant: We all have entrepreneurial spirit that we wanted to keep intact. Covenant has given us all that opportunity to keep our own shops, and run them accordingly as if we would if we were self-employed. They recognized all the years of experience that we have, as far as mortgage banking goes, so they’re basically allowing us to continue on as they are, and to take advantage of their back room.

I’ve had to lay off most of my administrative staff, but have been able to utilize Covenant’s at the same time, so as far as originations go, everything is pretty much the same.

Are we going to see a further contraction of the mortgage business, or is it already at critical mass?

I think you’re going to continue to see mergers and acquisitions. You’ve already seen a major exodus of wholesale lenders, like Chase, Bank of America and Citi on the retail side. You’ll continue to see consolidations of mortgage brokers and mid-size lenders.

Are the wholesale lenders gone for good?

I think they’ll be back. Third-party originations have always been very profitable for large banks, so they’ll be back.

Have regulations for mortgage bankers become too stringent?

The industry tends to cleanse itself. There is an overreaction on the regulatory side, but sooner or later, the pendulum will swing back. It just comes back to common-sense lending. The state and fed regulations are just crushing us, and will continue to crush us. This whole appraisal thing for mortgage brokers, the home valuation guidelines. The lenders and banks can’t even underwrite loans, they’re so short-staffed. Now they’re going to handle appraisals? That’s a recipe for disaster.

What can you do about that, wait it out?

Be a lender. Or, even better, join Covenant Mortgage!

Reilly’s Five Favorite New England Sports Moments:

1.) Super Bowl XXXVI: Patriots 20, Rams 17. “That goes without question. It was probably the most exciting time of my life.”

2.) The Red Sox winning the 2004 World Series

3.) The Patriots beating the Dolphins in Miami in the 1985 Divisional Playoff game. (Patriots went on to lose to the Bears in the Super Bowl.)

4.) Following the Celtics in 1986, when they were 40-1 at home and won the NBA Championship.

5. ) The game where the Red Sox hit four straight home runs at Fenway Park against the Yankees (two years ago). “I was at that game.”