Mortgage lender sees increased demand; adds 50 people to staffPETALUMA -- Banking on its preference for funding loans to homebuyers with stable finances, First California Mortgage plans to expand its headquarters office early next year to accommodate more than 50 employees hired locally this year.

The mortgage banker expanded its short-term credit capacity by $110 million so far this year, via three warehouse lending arrangements.

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"For us it's all about cash and liquidity, and our loans are performing exceptionally well in the secondary market," said Christopher K. Hart, First Cal president and vice chairman.

Warehouse lending allows First Cal to carry more loans between the time they are funded and when the notes are sold to participating lenders. The latest such lenders for First Cal are NattyMac, a new venture between Fannie Mae and Guggenheim Partners, Flagstar Bank and GMAC.

The company is licensed to lend in nine states and is approved for funding loans on foreclosed homes held by Fannie Mae. First Cal also is a Fannie Mae direct lender, HUD lender, approved national correspondent for major banks and offers a DealPoint retail lending service to community banks.

Mr. Hart credits the company's growth when other mortgage companies, including its predecessor, went bust to thorough yet costly documentation of borrowers, resulting in less than 10 percent of real estate-owned Sonoma County properties going into default again.

There could be increased political pressure in coming months on Fannie Mae and Freddie Mac to sell foreclosed and troubled loans on their books at a greater speed, Mr. Hart predicted.

"The foreclosure book that is coming is the largest we've seen," he said. Those properties could start coming on the market in greater numbers in the spring.

However, to prevent market prices from slipping much further than they have already in Sonoma County and other foreclosure-challenged markets, note holders likely will try to hold back the supply as long as possible to prevent sale prices from eroding.

"A 5 or 10 percent reduction in pricing is possible, but 30 percent or more, I don't think anyone will do that to themselves," he said.

Warehouse lending deals have helped thaw "frozen" credit markets that had shrunk from $200 billion in daily average liquidity to $20 billion in the past two years, he noted.

Now, the company's pipeline of loan applications to research has increased 150 percent in recent months as loan interest rates hover at historic lows, according to Mr. Hart.

Loan volume is set to reach $1.4 billion this calendar year, up from $1.1 billion last year. The goal for next year is $3 billion.

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First Cal now has 225 employees in eight offices in California, Colorado, Arizona and Hawaii, including 70 hired since June. Soon the company will have 130 in Petaluma, with 32 hired in the past few months. Twenty more are expected to be hired by December.

To accommodate the staff growth in Petaluma, First Cal signed a five-year lease with Cornerstone Properties for the 23,000-square-foot top floor of a former Cisco Systems office building at 1435 N. McDowell Blvd. Currently, the company occupies 13,000 square feet at 5401 Old Redwood Highway and plans to relocate in the first quarter.

First Cal started in 1977 and was sold to GMAC in 1995 and then was morphed into GreenPoint Mortgage in Novato in 1998. Founder and current Chairman Dennis Hart restarted First Cal in 2002.

Steven Leonard and Brian Foster of Cassidy Turley BT Commercial represented First Cal.

For more information, call 707-238-3700 or visit www.firstcal.net.