An odd couple?
Some might say so.
One is a longtime veteran of the banking industry who also spent 16 years as a minister in the Bay Area. The other is a man who taught English for eight years at Merced High School before becoming a mortgage lender. One is a numbers guy. The other is a people guy. One is 64. The other is 40.
And now they're a team.
Just over a month ago, Ed Walters and Scott Crawford joined forces as branch managers of Bank of Commerce Mortgage. They provide financing for people to buy homes and refinance those homes.
The unlikely pairing was motivated by survival. Both men have been in the eye of the foreclosure hurricane here and governmental reactions to the colossal missteps of Wall Street in the 2008 financial crisis.
They've seen their bottom lines shrink. They've seen colleagues laid off. They know the sullied reputation people in their line of work now have among the general public.
Yet they gambled on each other.
"I was looking around for someone I could talk to and trust," Walters, the numbers guy, says. Adds Crawford, the people person: "I wanted to create a culture in the office of giving back."
They've had breakfast together once or twice a month for seven or eight years to talk about new regulations, the local market and other issues.
In December they met at Wimpy's. Bounced a few ideas off each other. Found they shared a belief system, an understanding of what had happened in local markets and of the need for change.
As manager of Guild Mortgage in Merced for seven years, Walters had seen the size of his office shrink to four people from 21 in a year. Three years ago Crawford had 10 employees in three branches as manager of All-American Mortgage. When they decided to merge, Walters brought four people with him, Crawford three.
Crawford's firm had joined Bank of Commerce Mortgage in May 2011, mainly because of a law passed that spring called the Dodd-Frank Act. After it was passed, according to Bloomberg, Mitt Romney's website called it a "burden" on the economy. Newt Gingrich said it was "a regulatory Tower of Babel that is paralyzing the American economy," Bloomberg reported.
People on Main Street may have felt Wall Street was getting the reforms and regulations it deserved. But the law mandates reams of required paperwork from all firms in the industry.
Every finance company has to document and maintain specific timelines as they relate to credit applications. Crawford has seen estimates that "hundreds of millions of dollars" have been spent on attorney fees and staff to stay in compliance.
Many smaller firms went belly-up because they couldn't comply with all the reporting regulations. That's why Walters and Crawford decided to join forces with Bank of Commerce Mortgage, founded in 1994 and serving customers mainly in the western states.
It's early days, but both men are upbeat. Walters needed a company that met the compliance and compensation requirements of Dodd-Frank, as well as the technological support. Crawford needed help managing the office and growing the branch.
"Our partnership has proven extremely beneficial for both of us, our loan officers and our clients buying or refinancing their homes," Crawford wrote in an email.
Both men concede that unscrupulous and greedy lenders -- and buyers out of their financial depth -- contributed to the foreclosure epidemic here. In a cruel paradox, today the branch is fighting to find houses to sell.
Some 40 percent of sales now go to cash buyers, often investors speculating on a rise in the market or wishing to turn around and rent the house for lucrative monthly payments. First-time buyers are being squeezed out by the people with cash.
Scott reckons there may be around 200 residences in the "shadow inventory" -- houses with a notice of foreclosure or taken by a bank but not put on the market. "Some (buyers) have been looking for two years," he says.
Another irony is that the affordability index in Merced is among the best in the nation. That means that the drop of median home prices has edged closer to median household income. According to the California Association of Realtors, in 2011, the Central Valley was the most affordable region of the state, with Merced posting an affordability index of 76 percent. Crawford says that percentage this year is up to 85 percent.
Even so, Walters and Crawford know the path ahead is far from smooth. But both remain optimistic about the macro economy and the property business.
Walters was a minister in the Churches of Christ at Walnut Creek for 16 years before he entered the industry. The Atwater High graduate cites Scripture to describe the corporate culture he works in with Crawford: Matthew 7:12: "So in everything, do to others what you would have them do to you."
Both believe Merced is on the way back. "We have more potential for growth than any other city in California," Walters says.
Adds Crawford: "We are a story of being handcuffed by the government, but instead of folding, we used it to grow and create a team."
Executive Editor Mike Tharp can be reached at (209) 385-2456 or mtharp@mercedsunstar.com
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