BUSINESS WATCH:Home loans finding lenders

The mortgage industry is in trouble right now, and Tim Sibley is reaping the benefits.

Sibley, an in-house loan officer for First Capital, has done steady business in his Newport Beach and Irvine offices while other mortgage brokers have closed shop or suffered layoffs. Home loans may have fallen off around Southern California as real estate goes through its slowest patch in 12 years, but thanks in part to that drop-off, the Newport Beach resident has had his hands full.

"As other brokers are going out of business, these deals in escrow that have to close are ending up on our desks," he said. "We're picking up the pieces a bit and being able to fund some loans that other mortgage companies were having trouble with. Realtors are calling us and saying, 'Our broker is out of business.'"

Newport Beach and Costa Mesa, like many cities around the Southland, have been hit hard in recent months by the slowdown in home sales. According to the state Employment Development Department, firms in the two cities reported 694 layoffs since March — with 210 at CB Richard Ellis, 181 at Ditech.com, 150 at Quick Loan Funding, 109 at WMC Mortgage and 44 at Express Capital Lending.

What is the solution to staying afloat? Sibley, whose firm is housed within Coldwell Banker, said brokers are more likely to stay in business if they have an established name, have made prudent loans in the past, and have a direct connection with a real estate agency. Many of the brokers withdrawing from the field, he said, had jumped in to make easy money and granted too many subprime loans — the industry term for loans to people with shaky credit histories.

Jessica Brown, director of business development for Costa Mesa-based Assurance Capital, said her company tightened its standards and stopped making subprime loans a year and a half ago. Now, the company is thriving so much it is hiring new employees.

"It's like, 'We told you so,'" Brown said. "We were saying this a year and a half ago. Our business went down a year ago because other people were doing loans that we wouldn't do."

To broker Galel Fajardo, an affiliate member of the Newport Beach Assn. of Realtors, the tightening of the mortgage field has had at least one positive effect.

"I think it's been a great cleansing of the real estate business," he said. "There are a lot of people who have gotten into the business who are inexperienced on the lending side and as agents, and that has caused so many of the problems we've seen across the country. Now, people like that are going to leave the business, and the true professionals are going to remain."