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Snohomish County business
Local lending company soars after flying "under the radar"

By Cydney Gillis
Times Snohomish County Bureau

Layne Sapp's mortgage-wholesaling business expects its annual revenue to double, to $250 million, next year.

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Layne Sapp started in 1984 as a private mortgage broker. This year, his company expects to provide $3.1 billion in mortgage loans and bring in $120 million in revenue.

Not bad for a firm that Sapp, 41, started as a home-based business with $2,500.

For 18 years, Mortgage Investment Lending Associates grew "under the radar," Sapp said, by building an efficient mortgage business that has slowly expanded into 26 states.

Since 2002, the Mountlake Terrace company's business has doubled each year. MILA, as it's also known, now plans to move into 17 more states in the next year, and Sapp projects it will provide $6.5 billion in loans and take in $250 million in revenue next year.

To accommodate the growth, MILA is expanding. In May, Sapp's real-estate holding company, CRS Financial, paid $13 million to buy a six-story building at Lynnwood's Quadrant I-5 Center, a complex of three buildings once occupied by Boeing on 44th Avenue West.

The purchase allowed Sapp to rename the complex the CRS Corporate Centre. MILA is now finishing $5.5 million in tenant improvements to the building, where it will move about 200 employees next month.

Company at a glance Founded: 1984 Headquarters: Mountlake Terrace Employees: 550 Revenue: $120 million expected this year

The company will remain headquartered in Mountlake Terrace at a former Safeco building that CRS bought in the past two years. As the company grows, Sapp said, he plans fill the top three floors of his new Lynnwood building with 900 underwriters. That includes adding 75 to 100 employees by the year's end and 650 by 2007.

Sapp attributes his success to building his company slowly and making life easier for customers.

As a middleman, or wholesale mortgage lender, Sapp doesn't deal directly with borrowers but provides loans to independent mortgage brokers who do. About 90 days after MILA grants a loan, Sapp said, the firm batches it with others and sells it to Wall Street titans such as Merrill Lynch and Morgan Stanley.

Since 1995, Sapp said, MILA has invested $50 million in a software system that relies on artificial intelligence to automate the underwriting process. Mortgage brokers use the program to enter a borrower's income, length of employment and other financial data — up to 250 parameters in all — to get a commitment on a loan within 10 seconds.

Mortgage lenders can take a week to approve a loan and 30 days to process it. Depending on the underwriter who handles the loan, Sapp said, the borrower might be required to provide more paperwork, or the loan might be refused.

It can take a lot more time and trouble for people in the market segment that MILA serves — "nonprime" borrowers who have been late on credit payments, lack a down payment or haven't been at a job long enough.

The software not only finds a loan specific to the borrower's needs, Sapp said, but tells the mortgage broker what documents the borrower will need to present, how to present the loan paperwork and how long the process will take. That removes surprises for both the borrower and the broker, ensuring MILA gets repeat business, he said.

"The mortgage business is very painful," Sapp said. "If you can deliver accurate answers up front, the loan officer dealing with the customer is now more effective."

Tony Fisher, a senior mortgage planner with Home Star Lending of Bothell, said the system is unique.

"I work with probably 50 lenders," Fisher said. "[With] some, you can apply online and get an idea what you can do with the loan, but MILA does a loan commitment. I can turn in my conditions and get cleared right away.

"It gives me more credibility with my clients. I can do more loans faster, [and] I can spend quality time with the client.

"It's pretty amazing," Fisher added. "I've watched them grow like crazy in the past 24 months since they've gone automated."

In the next two years, Sapp said, he will enter the prime lending market, where the company will compete with retail lenders such as banks and mortgage companies. "It's been a good ride," he said.

Cydney Gillis: 425-745-7813 or cgillis@seattletimes.com

Copyright © 2004 The Seattle Times Company

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