great for the economy."(Photo, Tom Croke)" title="Stephen E. Adamo:"Debt consolidation isgreat for the economy."(Photo, Tom Croke)"/>
"Debt consolidation is
great for the economy."
(Photo, Tom Croke)
Name: Stephen E. Adamo
Age: 36
Position: President of the Rhode Island Mortgage Bankers Association; President
and Chief Operating Officer Citizens Mortgage Corporation.
Background: Before joining Citizens Mortgage Corporation, Adamo was a district
manager for North America Mortgage Company.
Education: Merrimack College, Bachelor of Arts (1987)
Family: Married, two children
Residence: East Greenwich
PBN: What is the connection between Citizens Mortgage Corporation and the Citizens Bank with which so many Rhode Islanders are familiar?
ADAMO: Citizens Mortgage Corporation is a subsidiary of Citizens Bank of Rhode
Island. We originate residential mortgage loans for the four states where the
bank operates and the peripheral markets in Maine and Vermont. The mortgage company
has 200 employees — 90 sales people. The bank is a terrific arm to support us.
For perspective, how many people work for Citizens Bank?
In New England, there are 8,000 employees. There are 3,800 in Rhode Island.
Tell us about the Rhode Island Mortgage Bankers Association.
It is a very vibrant organization. We have terrific legislative efforts. There
are 150 lenders who make up the membership. We are putting on a Marketplace event
on Saturday, April 28 at the Warwick Mall. Last year, we did it on our own as
Rhode Island Mortgage Bankers. It’s an opportunity to reach out to the community
and discuss financing. This year we are teaming up with the Rhode Island Association
of Realtors. There will be Realtors selling their homes, as well as about 30 lenders.
We think we will see 4,000 or 5,000 come through the mall. We’re spending a lot
of money on the advertising and marketing.
It sounds like competitive forces have discovered that teamwork can pay dividends.
It is important to reach out to the community. Although we are all competitive
in our own right, it’s the right thing to do. As an organization, we do a lot
of social and networking events. That is good for one another. We put on a lot
of educational events. We have also been trying to team up more with other organizations
like the Rhode Island Association of Realtors, the Rhode Island Life Underwriters,
the New England Mortgage Bankers AssociationWe try to use their education events
to offer to our membership.
Do you get the sense that the consumer is thirsting for the kinds of information and services you are offering?
Today, more than ever. Nationally, this market is probably going to do $1.4
trillion. The biggest market ever was 1998. Everyone refinanced. That was $1.5
trillion. So we’re inching close to the $1.5 trillion. Markets have not been close
to that in recent history.
We are seeing interest rates drop, reflecting an increasingly volatile market. Is now the time for people to consider refinancing their mortgage – or at least re-examine the conditions of their current mortgage?
There is no doubt people should know what their interest rate is. In this
environment you should check to see if you could refinance and save some money
– and possibly, consolidate some bills. The refinancing activity has increased
substantially this calendar year. Most of the refinance activity we are seeing
at Citizens and on behalf of the Rhode Island Mortgage Bankers Association is
debt consolidation. The markets have been vibrant and now is a great time to do
it.
What are main reasons someone looks to refinance their mortgage?
The first reason is the basic interest rate. They want a better rate. The
second reason is debt consolidation. The third reason is to cash out- – to get
some of the equity of their house to use for various reasons, such as education.
When you talk about debt consolidation, what exactly are people looking to do?
They are consolidating credit cards, auto loans, sometimes second and third
mortgages – into one. When you consolidate those debts the monthly payment comes
down dramatically. If you can get down to one monthly payment the chances of your
saving are great. On a monthly basis, the chances of creating more disposable
income are good.
And that’s good for the economy.
That’s great for the economy.
We used to hear that if interest rates dropped a full percentage point from where your were sitting, it was time to refinance. Is there a formula to follow these days or is it not that simple?
It used to be two points, six or seven years ago. Then it went to a point
and half, and then it went to about a point. Today, it’s if it makes sense. If
it is just the rate of the mortgage — with so many financing options — it is
possible that a half point might make sense — or even a quarter. If you can get
a zero point no closing cost loan, then just about any rate reduction makes sense.
But monthly payment is critical. If you can take your monthly payment and roll
in debt consolidation, the reduction in monthly payment may make a difference
even at the same rate.
Do the market forces that dictate residential real estate numbers — are they
the same forces that impact commercial loans?
We all experience the same economic relationship toward money and disposable
income. Lower interest rates mean that borrowers of all types get lower rates
when they borrow. So I would imagine that it would impact the small business owner
at the same time.
The business community continues to deal with a tight labor market. The availability of real estate certainly plays a role as companies reach out to bring quality employees to Rhode Island. What are your thoughts on the availability of housing in Rhode Island?
Both Rhode Island and Massachusetts are experiencing difficult inventory problems
— where there is less inventory and appreciation has gone up. Having said that,
Rhode Island has become a destination of choice. And now with public transportation
going Providence to Boston and in the future, from Warwick to Boston it makes
Rhode Island a real desirable place to live.
What is your sense regarding the health of the new home construction market?
New construction is still vibrant — both in Rhode Island and Massachusetts.
We’re seeing purchase money on new construction, single family, multi family and
condominiums all going up on behalf of Citizens and the Rhode Island Mortgage
Bankers Association.
Are the opportunities out there for young professionals, in term of finding that affordable starter house and then maybe moving into something larger?
The neat thing about Rhode Island is that there is a lot of product opportunity
for financing. That allows the first time buyer to get into a starter home and
Rhode Island still has starter homes that are affordable. And we do see people
move up. We also see a lot of empty nesters looking at the condominium market.
What about the capital city? Are there houses to be found in Providence?
The entire city is a good market. There are beautiful homes all over the city
and the inventory is no different in the city than in the suburbs.
South County has experienced well-documented growth in recent years. But homes also seem to be selling well in Warwick, Cranston, North Providence and other communities. Are we seeing a trend of people coming back to the cities?
There is no doubt about that. It has become the whole state now, not just pockets
of the state. At one time it was just Washington County. That was the big growth
spot. Then it became parts of Kent County, like western Coventry. But now it is
one geography. Markets like Cumberland and Lincoln have been extremely vibrant
because of the commuter rail. Public transportation efforts have made a difference.
We have seen much change in the banking industry over the last few years. Have those changes – the mergers and consolidations – had an impact on the home ownership market?
As far as residential lending goes, there are more products today than there
have ever been. Nationally, what was considered sub-prime lending accounted for
one percent of the mortgage market. Today it is 11 percent of that market. Sub-prime
lending isn’t necessarily bad or predatory lending. It is for people who need
an alternative. What has happened in recent years is that there are so many products
available that financing options have opened up for a wider array of people. That’s
been good for housing here. That’s been good for housing nationally. There is
a 70 percent home ownership rate.
Does that mean the American Dream exists?
There’s no doubt about that. The American Dream is alive and well. It is alive
and well here in Rhode Island.
