Home, Sweet Loan

Gene Richards distinguishes Spruce Mortgage from a forest of competitors by keeping it simple

by Portland Helmich

Too many cooks spoil the broth. That familiar proverb could be Spruce Mortgage's motto. The full-service mortgage brokerage firm in downtown Burlington aims to serve customers by streamlining the mortgage financing process. "One of the biggest complaints customers make about the banking business is the number of people they have to deal with to get a home loan," says Gene Richards, who created Spruce Mortgage Inc. in 1995, after 15 years as a banker.

Gene Richards manages eight self-employed loan officers at Spruce Mortgage on Main Street, Burlington. The business maintains a satellite office at Lang Associates on Hinesburg Road, South Burlington.

At Spruce, there are no receptionists, application processors, or underwriters. In addition to Richards, the company comprises eight self-employed mortgage loan officers who service home loans from start to finish. When customers call to inquire about their files, they can be assured of speaking to the same individual every time.

Richards and his crew make service their priority. They say that because they understand how stressful financing a mortgage can be, they go to great lengths to make the process smooth. "A lot of mortgage loan officers give customers a list of information to locate and tell them to bring it back in two weeks," Richards explains, "but we try to accumulate as much information as possible at the first meeting. We participate in the process by contacting attorneys and accountants so that customers don't have to do everything themselves."

"How many brokers really go the trouble of contacting as many lenders as possible to get a loan to go through?" asks Ranjit "Buddy" Singh, a Spruce loan officer. "We understand that it's our service that's going to keep us around."

Spruce also intends to keep itself around by offering competitive interest rates. "Our rates are typically a quarter percent below the banks'," according to Spruce broker Laurie Hill Alling. By doing away with non-essential personnel, Spruce strives to maintains a lower overhead than many mortgage brokers and pass the savings to customers.

It began in January 1995 when Bank of Boston sold Bank of Vermont and the Vermont branch of BancBoston Mortgage to Key Bank. Richards had headed up the Vermont region for BancBoston Mortgage since 1989. Realizing he would be forced to take a substantial pay cut, and that Key Bank intended to focus less on mortgages and more on small business lending, Richards decided it was time to take on a new challenge.

Fortunately, four of his employees from Bank of Boston -- Singh, Heidi Hayward Urish, Wendy Bombard, and Ellie Kenworthy -- were enthusiastic about joining him in his new pursuits. Key Bank started downsizing, and more changes appeared to be coming. "Key Bank's processing department was going to be in Albany," says Singh, "so we were going to lose more control over our files. We knew that if we started Spruce, we'd have control over the files and how quickly we could turn them around." (While banks might require 60 days to close on a mortgage, Spruce usually closes in 30 days or less).

Urish adds, "We all had fun working together, and I think we were looking forward to being under less of a bureaucracy."

Richards, 39, runs Spruce Mortgage like cruise control runs a car. "I take pride in letting the business run itself," he explains. "I don't believe in micro-management. I believe in hiring competent people and letting them do what they're hired to do without questioning their ideas and abilities." Viewing himself as a guide more than a boss, Richards tries not to get involved in the day-to-day operations of the business.

Singh appreciates Richards' management style. "He knows when to leave us alone," he says, "and he has the foresight to let us know where he thinks we should be headed."

Urish finds Richards very motivating. "He can't really be our boss because we're self-employed, but I turn to him a lot to get his insight on creative ways to generate new business," she says.

A native Vermonter, Richards has always been interested in money and challenges. As a child, he had difficulty sitting still. After he had wandered into the neighborhood grocery store on his own one day, his mother decided she needed a way to keep him occupied. "She got a tractor tire and filled it with sand and small change. I never moved out of that sandbox. My mother said it was the cheapest baby-sitter she ever had," he chuckles. "I loved the challenge of digging for the money even more than finding it." That attitude still prevails. "I've had a lot of successes in my life," he says, "but the money hasn't made me happy. The challenges have."

Richards recognized how well he managed challenges while working his first job as a teller at Merchants Bank in Burlington in 1980. "You deal with a diverse group of people on a teller line," he explains, "and my challenge every day was to be compatible with each person that came in. If someone had a problem and was upset, my challenge was to turn it around before they left."

At Merchants, Richards not only met his future wife, Julie, with whom he has two young sons, but also worked his way through every department in the bank from collections to switchboard to installment lending. He stayed after work every night for six months to learn the mortgage business. When an opportunity to become assistant manager of the mortgage department at Bank of Vermont presented itself, he took advantage of it.

"We seem to attract the savvy investor because those people shop around," says broker Laurie Hill Alling, "and they end up seeing that we're such a great deal." From left: Ranjit Singh, Ellie Kenworthy, Alling, and Heidi Hayward Urish.

Richards is quick to credit the people early in his career who took the time to show him the ropes, especially Cecile Fuller and Lisa Randall, with whom he worked at the Merchants and Bank of Vermont, respectively. "They're kind of like my mentors," he chuckles.

Richards is not afraid of new projects, nor is he hesitant to juggle many at once. "The more pressure you can give me, the happier I am," he admits. An avid community service volunteer who owns 17 rental properties, consults small businesses, and manages home building and renovation projects, Richards possesses a wealth of information on the area real estate market.

Carol Stone, a real estate agent at Lang Associates, frequently turns to Richards when she has questions about anything related to her business. "He's so in tune to the market, and he's never too busy to answer questions. Gene's hobby is helping people," she insists. "I've never seen anybody who gives more of himself and doesn't ask to be rewarded."

Another way that Richards and the loan officers at Spruce give to their customers is by offering them hope when their finances are in disarray. "There are very few people that come to Spruce that walk out of here with a 'no,'" insists the congenial entrepreneur.

"You never say 'no,' " says Bombard. "You just might ask them to consolidate their debt and come back in six months."

Spruce is confident it offers a greater diversity of loans than banks do: There are loans for individuals who have had financial problems, and there are jumbo loans, defined as any loan greater than $252,700. The average mortgage at Spruce, however, is $158,000; the average person puts down 5 to 10 percent of that amount. Alling says Spruce tends to specialize in high-end mortgages: "We seem to attract the savvy investor because those people shop around, and they end up seeing that we're such a great deal."

Due to the limited number of available homes in Chittenden County, timing has become critically important for area home buyers. Spruce's answer to the housing crunch is preparation. "We send customers off with a pre-qualification letter that indicates how much they can afford. That way, they can react quickly when there's an opportunity to buy," Richards notes. The company is also offering a new construction loan program to serve the growing number of people who are building houses instead of waiting for homes to become available.

The housing crunch is a local concern for Spruce, while the nation's rising interest rates are another. "We don't refinance as many mortgages when the rates are higher," says Kim Negron, another Spruce broker. While interest rates have been at an unprecedented low over the last two years, the trend over the last six to eight months has been upward.

Singh, who has a bachelor's degree in economics, trusts the instincts of Alan Greenspan, the chairman of the Federal Reserve. "He's trying to cool spending and the overall demand for goods and services by raising interest rates," he explains. "If we kept spending and consuming at this rate, eventually we wouldn't be able to supply enough to meet the demand and inflation would be the result. And anybody who knows anything about economics knows that inflation always precedes recession." Singh's outlook is broad and pragmatic. "Nobody likes higher interest rates because they make it tougher to get business in the short term. In the long term, though, they're what's most beneficial for an expanding economy," he concedes.

Richards and his team insist service is the main reason Spruce can survive in such a competitive market. Michael Tomkowicz would likely agree. The treasurer of Pizzagalli Properties was building a home in South Burlington in fall 1998 and describes his experience with Spruce as "seamless."

Spruce Mortgage offers a new construction loan program to serve people who are building instead of waiting for homes to become available during Chittenden County's housing crunch. From left: Wendy Bombard, Heidi Hayward Urish, Nancy Seidel and Kim Negron.

"There are hundreds of questions that have to be answered when you're building a house," Tomkowicz says, "and we had enough to handle with the contractors; we didn't need any mortgage issues coming back to haunt us. Laurie took us through each step carefully, explaining the important parts. She made what could have been a difficult process quite easy."

Beverly Wool was prepared to be refused a mortgage when she went to Spruce for help in 1998. She had never owned a home and was just starting her business as an interior decorator. Prior to meeting with Spruce, a tax attorney had told her she would never be able to buy a house because she had no income. "Buying a house for the first time was a terrifying experience," says Wool, "but Spruce was very supportive and understanding. They were terrific in finding the right opportunity for me."

The opportunity Wool speaks of is a no-income verification loan, designed for individuals with excellent credit who lack a strong income because they are self-employed or just starting a business. Urish worked with Wool and found her situation "pretty simple. ... You just have to educate the borrower," she says. "When the borrower understands the process, it's much easier for everyone."

In an effort to improve customer service, Spruce is updating its website to make it more interactive; the changes should be in place by April. Customers will be able to prequalify themselves for home loans, and be able to find out what their payments might be. If they choose, they can apply for mortgages online and periodically check the status of their loans. "It's about being able to access information 24 hours a day," says Richards. "This way, the times that we're not available, we are available."

Singh does not believe that Spruce will ever get to a point where everything is done on the computer. "People in Vermont want that face-to-face interaction," he suggests.

Face-to-face interactions are Richards' specialty. "My business is about being good to people," he says. "It's about treating people the way you want to be treated. Whenever I see someone in a difficult situation, I try to help." Richards has wisely surrounded himself with a group of brokers who share his belief that being aggressive on rates and compassionate toward others is the best way to run a mortgage lending business. "Business doesn't need to be complicated -- it's as simple as you make it," he says. "Spruce is such a good concept that it runs itself."

Portland Helmich is a free-lance writer who produces programming about wellness and spirituality for Oxygen Media Inc., a new women's cable television network in New York City.