Castle & Cooke gets into brokerage business

By Andrew Gomes
Advertiser Staff Writer

Castle & Cooke Hawaii, the state's largest homebuilder, is getting into the mortgage brokerage business.

The Mililani-based developer has formed Castle & Cooke Mortgage Inc. to help finance home purchases and refinance existing loans to buyers and owners of homes around the state starting next month.

The move is not a first for a residential developer in Hawai'i, but is part of a trend of big homebuilders, especially on the Mainland, competing with traditional mortgage originators.

In Hawai'i, Canadian developer Brookfield Homes, which is building a 270-unit project at Ko Olina, uses an in-house broker, Island Home Mortgage, a subsidiary of Brookfield-owned Southland Mortgage.

Castle & Cooke said it will focus mainly on new homebuyers in Mililani as well as people buying or refinancing existing homes in Central O'ahu.

The operation will be headed by Rusty Rasmussen, former vice president of First Hawaiian Bank's mortgage banking department, who will work with four loan officers.

Rasmussen said Castle & Cooke Hawaii sold 525 homes in Mililani last year for about $80 million, and that the goal is to originate a "high percentage" of mortgages for Castle & Cooke homes sold this year.

"We should be able to do $80 million in mortgages," he said.

As a mortgage broker, Castle & Cooke will work with a wider variety of lenders in Hawai'i and on the Mainland, including local banks, to seek more competitive financing deals for customers. The company will receive fees for originating mortgages, but Rasmussen said the operation is more about serving customers better.

The mortgage origination business is a fairly popular one for big homebuilders, said Ricky Cassiday, a research consultant with Prudential Locations.

"All the big builders are trying to capture the mortgage on the home sale," he said.

Hawai'i-based developer Schuler Homes, which has mortgage brokerage operations at some of its Mainland divisions, expects to start offering mortgages locally in the next year or two after it completes its merger with Texas-based D.R. Horton Inc.

Cassiday said the practice is especially appealing during strong housing market cycles, but less attractive for developers during market declines because of the expense of originating loans when sales are slow.

For example, Gentry Homes used to broker mortgages, but sold the operation to First Hawaiian Bank in 1996 when the market slowed.

"You set it up when the market is go-go-go," Cassiday said.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.