Cambridge Savings Bank – in the enviable position of having more residential mortgage loans than it would like in its portfolio compared to commercial loans – has announced the opening of its new mortgage lending subsidiary, Farwell Lending.

The $2.1 billion mutual joins a handful of local institutions that already are the parent companies of mortgage subsidiaries or divisions, including Salem Five, Eastern Bank and Citizens Bank.
Farewell Lending – named after CSB’s first board president, Levi Farwell – opened its first office on June 1 in Stoneham.

“This affords the bank the ability to be able to originate loans and sell to the secondary market with the stability of a $2 billion bank behind the loans,” said Jerami A. Marshal, a 31-year Massachusetts mortgage industry veteran and Farwell Lending’s new president.

Marshal is also a member of Banker & Tradesman’s advisory board.

The new company is intended to fill a vacuum of business left by some mortgage brokers and wholesalers who went out of business in the past couple years during the state and nation’s subprime woes, said Cambridge Savings Bank President and Chief Executive Officer Robert M. Wilson.

When the bank realized many of those businesses would no longer be around, but that borrowers still would be, it decided to step in to fill the void, Wilson said.

Jim Jones, a banking industry consultant and president of First Wellesley Consulting in Wellesley, said Cambridge Savings’ decision to form the subsidiary is timely for that reason.

“Mortgage brokers are leaving the industry in droves, and banks are looking to fill the vacuum,” he said. The housing slump, by many estimates, won’t last beyond 2009, he added, so banks are now in a position of choosing to seize new lending opportunities or let them go to others.

Farwell Lending will also help expand Cambridge Savings’ footprint outside its market area and into New Hampshire, Wilson added.
Marshal said Farwell Lending, as a bank backing the mortgage company, “will be attractive to Realtors, who want to make sure that their buyers are dealing with a company that will still be around next year, and to borrowers, who want to know that their lender is an ethical company, and who want longevity.”

The company will lend and sell the same quality of loans that the bank itself offers, Wilson said.

Joining Marshal at the new company is his former industry colleague Kris Callahan. Marshal will serve as president and Callahan as vice president of residential lending. They are joined by two additional loan officers and are reviewing applications for five additional loan officer slots.