Finance florida home

Terry W. Claus Jr. was a business school graduate fresh from the University of Miami when he landed a sales job at Bertram Yacht Co. in 1984. To Claus, the $20,000 a year job seemed plum.

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That was until his father, a 30-year mortgage banking veteran, asked him to come work for the family start-up, Home Financing Center Inc. "He put me on straight commission as a loan officer and he said, 'I'll guarantee you'll make $50,000 your first year.' And I did," recalls Claus, now company president.

In the intervening 20 years since he decided to join his father's venture, it proved to be a wise choice. Home Financing Center, the company Claus today owns with his sister Claudine Claus Wheeler, has grown to be the largest independently owned home mortgage lender in South Florida. The company originated $182 million dollars of new mortgages in 2004, and it has expanded from one financing center to five, along with 15 satellite offices statewide.

Refinancing mortgages has been the bread and butter of consumer lenders for the last several years, and Home Financing has benefited from the low interest rate environment that has fed that boom. But Claus and Wheeler began planning last year for the eventual rise of rates, diversifying both the company's customer base and the services it renders.

Chief among the moves is a downpayment-assistance program the company is pitching to large local employers, called Employer Assisted Housing. The program, say Claus and Wheeler, would help companies retain employees by providing a subsidy to bridge the gap between how much they earn and how much a home will cost to purchase.

"Employer benefits have been scaled back, but there remains a big disparity between how much home people can afford to buy and what they earn," says Wheeler, Home Financing's executive vice president. That dilemma often spurs employees to quit and find jobs near more affordable housing. Wheeler estimates it costs companies 1.5 percent of an employee's salary to replace that person.

The potential subsidies could amount to as much as half a percentage point of the home's purchase price, which would be applied at closing. Wheeler estimates there are approximately 3,300 South Florida companies and between 1.5 million and 1.9 employees that could take advantage of Home Financing's Employer Assisted Housing program. The company has already signed up Discovery Channel Latin America, Organica USA Inc., Assurant Group, and Gulliver Schools as clients.

"An employee that owns a home has roots; they are lot less likely to leave," Wheeler says.

John Krutulis, assistant director of Gulliver Schools, says teachers at the start of their careers especially need assistance financing a home purchase. "It's hard for people to find a place that makes it into their means," he says. "Young teachers [who may be] first-time homebuyers don't know how to go about it."

Krutulis says two faculty members signed up last month but it is likely more will after Home Financing begins seminars to educate Gulliver employees about home buying and selling, and financing.

Buying and Selling

In a bid to boost loan originations and generate fee income from a more diversified base, last July Home Financing launched its own real estate company, Home Financing Center Realty Inc. Dubbed "The Short Cut To Closing," the program works most efficiently when both buyers and sellers are pre-approved Home Financing Center customers. The real estate brokers can then try to connect the two based on search criteria given by both parties.

"We can save the seller money and a lot of time, because they know that this pool of people is already approved," Claus says. Wheeler adds that "the process is more streamlined and so closings happen faster, boosting our [loan] volumes."

For the buyers, having real estate agents "in-house" means that after getting pre-approved for a certain loan amount, they can discuss strategy with a real estate agent before leaving. If dissatisfied with the options that their approved loan amount gives them, they can then go back to the loan officer and figure out a way to restructure the loan.

"The worst thing to do is you approve somebody for [a home] that doesn't exist, and then send them out there. What good is that? That doesn't work," Claus says. "So by bringing everybody together the same day as a team, then you're able to get the real answers and accomplish what people are trying to do, which is buy a house."

While many mortgage companies from strategic alliances with real estate firms--becoming the "preferred lender" for certain agencies, few marry the two businesses--preferring to concentrate on core competencies. Miami-based HomeMortgage, for example, is the preferred lender for real estate firm First Service Realty. HomeMortgage president Bernie Navarro says, "We've used the approach of strategic partnerships where everyone is a master of their own discipline."

Home Financing Center's lack of experience in the real estate market may be a hindrance for the company, says Gus Rubio, Coldwell Banker regional manager for Miami-Dade County. "Clients are going after brand awareness and brand recognition, not [a company] just starting to dabble in other fields," he says.

Home Mortgage's Navarro agrees. "Sometimes you can't be a master of all," he says. "If there's education and there's adequate training, it may and could work." He also notes that going from the mortgage business to the real estate business seems to be a much easier transition than the going from real estate into mortgage.

Since July, Home Financing's 15 agents have sold 41 homes and are taking on about 10 more a month. Wheeler says more agents will be hired as the company's services expand.

Claus and Wheeler have no desire to turn their company into a real estate firm, though. The business of mortgage origination is still their primary one. Home Financing has found particular success in partnering with credit unions, which traditionally have not offered home loans to their members. Credit unions representing the University of Miami, Florida Atlantic University, Baptist Hospital Miami and air traffic controllers have all outsourced mortgage lending to Home Finance. Claus estimates that 25 percent of the company's referrals are generated there.

All In the Family

Innovative thinking has helped the company expand since its launch. The elder Claus, who died in 1998, pushed the idea of loan pre-approvals and streamlined loan application processing. The resulting efficiencies helped boost mortgage originations and the company's bottom line, Claus and Wheeler say.

Terry W. Claus Sr. started off in the mortgage business working for Pittsburgh-based Family Finance during the 1950s. His assignment was to just keep under-performing branches afloat, but he demonstrated a knack for turning them profitable.

He moved his family to Miami, and by the early 1980s Claus Sr. decided to launch his own business after his wife, Bunny Claus, miraculously recovered from inoperable breast cancer. Wheeler says her mother's passion for life "really helped jumpstart this business with my dad."

Bunny Claus died in 1992, and Claus Sr. suffered a fatal heart attack six years later. His death came as a complete shock to the siblings, but Claus says they were prepared to take over the business. Remembering what it was like to work for her father, Wheeler says, "I can't imagine a tougher boss. [But] that was the father part of him, not necessarily the boss in him, probably. The father was trying to make sure that his kids would survive when he wasn't around."

Wheeler says the "kids" in the office included her future husband Todd Wheeler, whom she met through mortgage banking connections. He is a former loan officer from Amerigroup Savings and Loan who came to work for Home Financing Center in 1989 and now serves as its senior vice president.

Wheeler and Claus say that their father's business practices are never far from mind. "When I have to make a decision on something, I always think, 'What would dad do?' And then try to do the same thing," Claus says.

As the company continues to grow, Wheeler says she and her brother are working on training others to run aspects of the firm, much as their father prepared them to take over one day. "I think in the past we were always the go-to people all the time," she says. "But now, we're developing our people into leaders and letting them lead and letting them manage, even if it means they make some mistakes here and there, that's how they'll learn."--additional reporting by William Plasencia