Family Choice Mortgage Co. is based in South Yarmouth.
Although Family Choice Mortgage Corp. trumpeted its acquisition of Esplanade Mortgage in a recent press release, the owner of Esplanade maintains the deal is not finalized.
Family Choice, a 3-year-old mortgage company with headquarters in South Yarmouth, released a statement saying representatives of the two companies had reached agreement on a deal that would see Family Choice acquire Esplanade Mortgage Co.of Quincy. However, when contacted by Banker & Tradesman, Stephen Sylva, president of Esplanade, said they have agreed “in principal,” but nothing had been signed.
“At this point in time, I’m not sure. I probably will [go through with it]. I’m 99 percent sure.”
Sylva added he didn’t approve or see the release, delivered via fax to Banker & Tradesman, although he is quoted in the document.
“We’re still in negotiations on the sale, but I haven’t finalized it. I have a couple offers out there. I was sort of shocked [by the release],” Sylva said.
“I didn’t know about the press release. I think they should have faxed me the press release,” he said, adding that the announcement was premature.
Sylva said he is still fielding offers for various portions of the company.
Jeff Lipes, president of Family Choice said the two entered into the agreement on Feb. 1 and expected the deal to close March 1. According to both Lipes and Sylva, only a portion of assets from Esplanade, which was formed in 1987, will be acquired. Sylva retains all rights to the name of the corporation.
In the asset sale, the purchasing company only acquires the goods and services agreed upon, not the liability for any loans made by Esplanade before the agreement was finalized, according to Lipes.
Family Choice, which had $150 million in closed loans last year, heard about Esplanade through one of its brokers.
“So we contacted them and talked to him, negotiated a deal that’s fair for both sides and agreed on Feb. 1 to become partners,” said Lipes.
According to Lipes, two employees from Esplanade will move into the Weymouth office of Family Choice. Sylva is to become assistant vice president of Family Choice.
“Esplanade had been a larger mortgage broker, probably similar in size to where we are right now. And they had a very strong customer base,” said Lipes regarding what attracted Family Choice to its ostensible merger partner. “What we’re able to do is combine the customer base that’s calling the Esplanade people and put it with our back shop, which was a lot more efficient both in number of people and in systems. So we’re able to get the operations side of things taken care of in a much more streamlined manner,” he said.
Lipes has a 20-year history in the mortgage industry. He had moved out of New England and worked at Knutson Mortgage in Minnesota, where he owned a large portion of the company. Knutson was sold to a Fortune 500 group and Lipes moved back to New England in the late 1990s, where he started the business with three of his brothers-in-law, he said.
“We started it at the end of 1997 and we’ve grown from the four of us to about 50 employees,” said Lipes.
“We slowly but surely hope to continue that growth.”
Great Trend
This is the second acquisition for Family Choice in the last 12 months, preceded by the firm’s acquisition of Mill River Mortgage Co.
However, Lipes isn’t looking to grow at all costs. Although Lipes, like others in the mortgage industry, said the company has experienced an “up tick” in refinancings since the reduction of interest rates by the Federal Reserve, he said he is careful not to rely too heavily on them. “We, as a company, have always tried to concentrate on the purchase [mortgage] business because in one day, your refi business could go away if the rates change enough,” he said.
“From our standpoint, the lowering of interest rates have saved a lot of the smaller shops that were struggling towards the end of 2000 that we would have liked to been able to try to partner with. So I think that gives them a reprieve,” he said. He added small shops that depend on a large volume to cover cost overruns may be in trouble in the coming year, while those that run a clean enterprise shouldn’t have problems.
Despite dire warnings about a possible hard landing in the economy, Lipes cites an economist from Fannie Mae who predicted an upward trend in the industry for 2001.
“Not that economists are always right, but that’s a great trend. Consumer confidence is weakening, but it’s still not like it used to be” when the real estate crash of the late 1980s occurred, said Lipes. “There’s too much diversity in our economy in New England.”
Family Choice Mortgage has offices in South Yarmouth, Weymouth, West Springfield and Hampden, Conn.
Esplanade is based in Quincy and was started in 1987.
