A second Medford mortgage broker has affiliated itself with a Portland mortgage bank.

A second Medford mortgage broker has affiliated itself with a Portland mortgage bank.

Mortgage Marketplace, founded in May 2006 by Jim and Debbie Palazzolo, has aligned with Portland-based Mortgage Express. The seven-person office at the corner of West Main and Holly streets will take on the new name beginning Friday.

Last month, Cox, Beard, Hall & Associates LLC moved under the umbrella of Portland-based Pacific Residential Mortgage.

"We made the decision to start talking to people in mid-February," said Jim Palazzolo, whose firm employs seven. "I felt like we needed to develop inroads for direct lending — in-house banking lines. The other thing was the potential changes on the horizon involving qualifications to do FHA loans for an independent mortgage broker."

Another element was for his office to retain its distinct culture, said Palazzolo, whose company handled $40 million to $50 million worth of mortgages during 2006 and 2007.

"We aligned ourselves with a company that understands we know how to do business in Southern Oregon," Palazzolo said. "We're not Portland, Sacramento or Seattle. There is a different business line and business culture here."

Mortgage Express is run by Kevin Hancock, a Medford native and an Ashland High School graduate, who worked at Mortgage Market — not to be confused with Mortgage Marketplace — a decade ago. The mortgage bank has four other Oregon branches and one in Vancouver, Wash., with an employee count of 100.

Hancock said the move for independents to affiliate with mortgage bankers has picked up speed.

"We went into January thinking we might add two before the end of the year and already we've added Gresham and Medford," Hancock said. "It's a matter of growing with the right people and the right companies. There are a lot of companies that would join with us, but on our part it's important to be selective — especially being 300 miles away. With Jim, it was a perfect fit."

While other local companies may follow suit in the near future, there are some holdouts.

John Mafrici, president of the Southern Oregon chapter of the Oregon Association of Mortgage Professionals and a state board member, said certification is a critical issue. For some firms affiliation is an easier road, while mortgage brokers able to achieve new licensing requirements will thrive.

"The National Mortgage Licensing requirements passed by Congress require brokers to pass both national and state tests, go through FBI checks and a credit check to gain certification," Mafrici said. "It's good for the industry to have tighter regulations. Unfortunately, the big banks made it more difficult for the mortgage brokers, but not their own people. To work with a mortgage bank doesn't require scrutiny or tests, you just have to register with the system."

Next month, mortgage brokers will no longer be able to offer FHA loans if they aren't certified.

"The state Division of Finance is hurrying to certify brokers, but they've only approved 1,000 so far," Mafrici said. "They have said if applications are in by the end of May, they will get reviewed by the end of June."

Once certified, mortgage brokers will have plenty of tools and programs to offer clients, Mafrici said.

"It's extra work doing all the paperwork required now," Mafrici said. "But I don't want to fold and merge with a bigger company. Each owner will have to make their own business decisions. Whatever the customer does, it's best to keep the business local."

Reach reporter Greg Stiles at 776-4463 or e-mail business@mailtribune.com.