| If the mortgage industry could claim its own “Indiana Jones,” that man would be Dave Bernotas, President and CEO of 1-800 East West Mortgage.
Throughout his career, he has faced obstacles that would have forced others to reconsider their career paths.
By the age of 13, both of Bernotas’s parents had passed away. His older sister, Paula, and her husband took him into their home. Shortly after he graduated from Boston College High School in 1972, Bernotas married and had two children, Joseph and Steve.
He and his first wife later divorced. He has two grandchildren, and recently wed the former Lori Quinno.
Initially, Bernotas worked in construction, building several McDonald’s restaurants, until he and a partner bought a Century 21 franchise in February 1979.
“It wasn’t the best time to open a business,” he said.
Interest rates hovered around 21 percent and banks had stopped lending money, but the business survived and thrived.
In 1982, Bernotas started Farragut Mortgage, which he built to “a significant size.” On Dec. 31, 1984, he sold the company to Merchant’s Cooperative Bank (later renamed Merchants Bank of Boston), but continued to run the business.
“We were the first company in the state to break 10 percent on 30-year fixed mortgage rates in 1985 and the first to have zero percent closing costs. In 1985-86, we developed a $1.3 billion service portfolio. This was at a time when the average loan balance was $120,000,” Bernotas said.
In 1986, the bank sold 20 percent of the company, retaining the remaining 80 percent. “We became only one of nine publicly-held mortgage companies in the country,”
Bernotas noted, “USA Today posted the top 10 stock picks in those days. Ours sat in that position for more than one-and-a-half years.”
Bernotas left Farragut at the end of 1989. He signed a two-year non-compete agreement, during which time he ran a scuba-diving business at Lewis Wharf in Boston. After the non-compete expired, he had a consulting business specializing in mortgage lending. From 1996 to 2001, Bernotas worked as northeast regional manager for Maryland-based Columbia National Mortgage, and then opened First American Mortgage Corp, hoping to establish a family business. After a year, however, his children pursued other opportunities; Bernotas sold the company in 2004.
To The Rescue
But the mortgage industry would not let him go.
East West, the bank and mortgage division of Commerce Bank & Trust, came calling. The FDIC had issued a cease-and-desist order and Bernotas was asked to rectify the situation.
“I started in June 2005, and by January 2008, all the regulatory problems had been solved,” he noted.
“When I took over, there had been more than 100 complaints with the Better Business Bureau (BBB). Now, we have an A+ rating at the BBB. We’ve also gotten a Bronze Award for the best mortgage company from Banker & Tradesman and our post-closing customer satisfaction rate is 98 percent,” he added.
East West is a wholly owned subsidiary of Commerce Bank & Trust, with its own board of directors. It has 40 employees, and a $400 million portfolio.
Bernotas eyes national expansion for the company.
“We have opened up new markets in Pennsylvania and are waiting for final approval in New York. We plan to open several physical retail branches around the state to maintain and grow origination units,” he explained.
Looking Back
Bernotas cites Farragut Mortgage as one of his greatest accomplishments.
“I’m very proud that I was able to start from nothing and ultimately take the company public,” he said.
The turnaround at East West shares top honors on Bernotas’s achievement list.
“The FDIC had never lifted a cease-and-desist order before,” he remarked. “They usually put a company out of business.”
Bernotas has served as chairman of the board of the Boston Community Health Center and as a board member of Jewish Big Brothers and Big Sisters. In 2010, East West donated more than $10,000 to the New England Home for Little Wanderers.
“For every loan we closed during the month prior to Christmas, we donated $100,” he noted.
Bernotas claims there is no magic formula to account for his good fortune.
“Not having an education beyond high school, I don’t know what I would have done if I didn’t get into the mortgage business. It’s part of the blessing,” he said.
