Robert Russo, who advertised as "Bakersfield's Refi Guy" and twice ran for city political seats, filed for Chapter 13 personal bankruptcy on March 26.
“I cornered myself in that market of refi and it’s gone,” Russo, 49, said Thursday.
Russo, a 15-year lending business veteran, isn’t the only local mortgage industry worker who has been stung as the market turned south. Russo’s bankruptcy attorney, Phillip Gillet, said he consults with financially strapped mortgage brokers, real estate agents and those who work in construction on an almost daily basis.
Many of those in the mortgage industry, where commissions are typically lower than those earned by real estate agents, are struggling with the diminished volume of loans, said Brian Dawson, president of a Bakersfield residential mortgage company, American Financial Services.
“The market turned off, and the business turned off so fast, and it just caught people,” Dawson said.
Russo was no exception.
His best business year was 2004, when he estimates he handled about 100 home refinance loans. The company he worked for, Oxnard-based Home Savings Mortgage, repeatedly awarded him for being a top producer. He carved out a niche as a refinance expert.
In 2004, he financed his campaign race for Bakersfield mayor, losing to current Mayor Harvey Hall. Four years earlier, he had also made an unsuccessful bid for the Ward 5 City Council seat.
And though Russo experienced several years of steady business as Bakersfield’s market accelerated, he said he never got rich. His bankruptcy filing contains little to suggest an extravagant lifestyle. Russo’s main assets are a modestly-priced home and an eight-year-old Mercedes-Benz.
Now the refinance market has dried up, Russo said. In the last year, he handled just three such loans.
Between 2004 and 2007, the volume of refinance mortgage dollars being loaned nationwide shrunk by 36 percent, from $358 to $230 billion, according to estimates by the Mortgage Bankers Association, an industry lobbying group based in Washington D.C..
Russo’s employer, Home Savings Mortgage, filed for bankruptcy last year, leaving him with a heap of unpaid advertising bills — an expense he once shared with the company.
“They left me hanging,” Russo said. Loan officers typically do business this way, fronting a good deal of money for an employer, expecting to be reimbursed later, said Beth Cheatwood, the branch manager at Bakersfield’s Medallion Mortgage.
“That’s why it’s so scary now in this business,” Cheatwood said.
Last spring, Cheatwood was left with $22,000 worth of unpaid expenses when Mortgage Tree, the Modesto company she had worked for since 2001, closed its doors. Money was due to appraisers, utility companies and employees, she said. Cheatwood dipped into her retirement to recover, and now does loans for a locally owned mortgage banking company, Golden Empire Mortgage Inc.
Russo hopes to persevere too. He found work with another mortgage banking firm. And the bankruptcy seeks to discharge much of his debt, and put him on a payment plan for the rest.
“I’m not running away,” Russo said. “I’m still working here.”