El Jefe: mortgage maverick

New Mexico Business Journal, Feb, 1994 by Arlene Cinelli Odenwald

MEGA MORTGAGE BANKER GREG FROST CONTINUES TO OUT-INNOVATE THE COMPETITION.

new Mexico's most prolific mortgage banker expects to turn a volume of $125 million this year, and he relishes being described as controversial.

If he has his way, the six-foot-two, 250-pound Frost will contribute to a revolution in the mortgage banking business. By the end of the year he plans to guarantee finalizing a mortgage in 15 days.

That's right, 15 days. Not 30; not 60; not more.

"If we can't, we should waive the originator fee..."

The best advice he ever got, says Frost, was to be true to his word. The worst advice? "You can't do that."

Frost learned survival and tenacity as a child in the tough eastside slums of Los Angeles where he and his mother lived after moving from a small adobe in Santa Fe.

"Football saved my life," says Frost, and he parlayed talent and street smarts into a football scholarship at the University of New Mexico in 1967 where he was a linebacker and captain of the freshman team.

He remembers arriving at the Albuquerque airport with $47 in his pocket back in '67 with scholarship in hand and a determination to make the best of it.

A college education first; a satisfying profession to follow.

He entered the S&L industry in 1972 and in 1977 was the youngest president of an S&L in the nation at age 28. He entered mortgage banking in 1985.

Savings and loans were dedicated to servicing one kind of loan -- the home mortgage. With the S&L debacle, a gap was left in the home mortgage market.

Mortgage bankers like Frost, now president of Frost Mortgage Banking Group with offices in Albuquerque, Santa Fe and Farmington, were there to shoot the gap. "We've replaced and absorbed the savings and loan industry's market share," says Frost.

"There's no comparison between the mortgage business of 20 years ago and today," he says. "The mortgage banking business has grown about 1,000 percent. "People say this is about as good as it ever has been in terms of housing and loans," he says.

"At the end of 1991, for instance, there were 35 mortgage companies in Albuquerque," says Frost. "Today, there are probably close to 90; statewide, probably about 100."

Not every mortgage banking business has experienced the mushrooming growth of Frost Mortgage Banking Group.

Over the last two years, his volume has grown 200 percent, and the company is still growing.

He hasn't been overly modest.

"I remember meeting Ron Bell (the Albuquerque attorney who advertises that he'll sue drunk drivers)," recalls Frost. "He told me how he was going to go about billboard advertising.

"I told him he was gonna take a lot of castigation from those in his profession, but if he could stand up to that, he'd make a lot of money."

Frost himself has taken heat over his aggressive advertising campaigns, which highlight low interest rates, the housing construction boom and the decline of S&Ls.

Most mortgage bankers, he says, rely on Realtor referrals for 70 percent or more of their business. Frost doesn't. Realtor referrals make up only 35 percent of his business.

After the decline of S&Ls, construction financing for acquisition and development of land dried up. The need for housing never died, but there was no way to service it.

Then interest rates dropped dramatically, the market improved and the demand for housing also increased.

All of those factors -- plus Frost's marketing plans for his business and 10-hour workdays -- are paying off.

"Right now, we fund anywhere from $12 to $15 million a month, all of that funding coming from outside New Mexico," he says. "We bring outside capital to New Mexico by selling our loans to the secondary mortgage market."

He's now looking into a somewhat different market: loans to building contractors.

"There's always a demand for fairly priced professionally originated mortgage credit, whether it be permanent mortgage credit type loans or interim construction type loans," he says.

He wants to go into pre-sold construction lending, which is not as risky as speculative construction lending.

He's looking for a credit line that will let him do just that.

Why should a borrower go to a mortgage banker instead of a regular bank?

"Do you go to a general practitioner for an eye checkup?" Frost asks.

"Mortgage bankers don't do car loans. We don't have certificates of deposit or savings accounts to worry about. All we do is mortgage loans."

Frost, who also conducts motivational seminars nationally for the mortgage banking industry, says: "Mortgage bankers are the borrower's advocate. The more successful we are at what we do, the better our income.

"In the course of working with a borrower, we end up as financial consultants.

"We'll help borrowers restructure their finances to get more of the kind of mortgage loans they need," he says.

So what should you look for in a mortgage banker?

"Look for experience," he says. "There are a lot of card-carrying mortgage bankers out there who were doing something quite different only six months earlier."

The borrower should also know whether credit decisions are made locally and the time it'll take to process a loan, according to Frost.