The good fight.

Author:Hewitt, Janet Reilley

Mike Young is a fighter. Not the brash, mouthy kind like Muhammad Ali, but more the determined and supremely effective kind like Sugar Ray Robinson. That may explain why Young has a framed poster of Sugar Ray hanging on his office wall in Ewing, New Jersey. Robinson won 173 fights out of 200--with 108 coming by knockout. The kind of guy you wouldn't want to mess with. Yet he never had to face the federal government in the ring. Young, on the other hand, has gone toe to toe with the feds--and won. Mind you, Young, the chairman of the board of Cenlar FSB, is no boxer. Still, he faced the fight of his life back in the 1980s during the savings-and-loan (S&L) crisis. After his company acquired a failed thrift from the federal government, Congress passed a law that wiped out much of what made the deal work on the new company's balance sheet. It was the mid-1980s, and thrifts were failing right and left. Young was president of Larson Mortgage Company and in 1984 his team successfully negotiated and received approval from the Federal Home Loan Bank Board (FHLT3B) to acquire Centennial Savings and Loan Association--a comatose thrift. The next year, Centennial Savings and Loan Association and Larson Mortgage Company reorganized under Cenlar Capital Corporation and Cenlar FSB.



But the S&L crisis kept getting worse and Congress finally acted. It passed FIRREA--the Financial Institutions Reform, Recovery and Enforcement Act of 1989. That sweeping law wiped out goodwill and the valuation of mortgage servicing rights (MSR) as assets that could be counted toward meeting mandatory regulatory capital levels.

That body blow ended up leaving Cenlar FSB second from the bottom on a list of troubled institutions with the weakest capital levels and deemed most likely to fail by regulators. Being on the bottom of that list meant your life expectancy was very short.

A company veteran remembers that the thrift just below Cenlar on that list did fail, as did many others above Cenlar on the regulators' list of basket cases. But somehow, Young came up with a game plan with specific quarterly benchmarks that would slowly bring the thrift back to health--if they could be met. And he and his team worked the plan relentlessly, rallying the troops until they survived the whole dark ordeal. But it took time and it wasn't easy. Young took a lot of punches during a very tough fight that went the distance.

His wife of close to 50 years, Diane, remembers those days as "a difficult time." She says he "put in long, long, hours on that." When asked how he dealt with the stress, she says he just worked more hours and went out on his boat to fish and think.

The real lesson from that time may be there's no give-up in Mike Young. Likewise with Sugar Ray, whose pro boxing career lasted nearly 26 years. But the amazing thing is Young didn't just bring his ailing thrift back from the dead. He had to first convince the feds to give him a shot at working the business plan that he and his management team devised.

Not many people thought they had a chance--especially the regulators.

Because the thrift was out of compliance with minimum regulatory capital levels, the regulators could have just shut it down immediately. But Young was willing to take the regulators to court to win the chance to nurse it back to compliance. And surprisingly, a judge sided with Young to force the regulators not to close down Cenlar until it got its shot at making its plan work. But the regulators were pretty sure the end was near.

Gregory (Greg) S. Tornquist, Cenlar's current president and chief executive officer, recalls, "It was quite a Houdini act" that was performed to save the company. And even today, people seem slightly stunned that Young and his team succeeded in pulling the company back from the brink.

On top of everything else, it was an employee stock-owned company--Mike Young's idea--so it wasn't just a matter of corporate survival. It was much more personal than that.

Tornquist says, "In hindsight, we probably wouldn't have bought the failed savings and loan from the government" if they had known that Congress would pass FIRREA and wipe out much of the asset value of the acquired thrift.

"We were affected dramatically. We got into survival mode," Tornquist says. He adds, "It was a pretty big hole to dig out of."

But this all brings us to the present, when the mortgage industry faces another big hole to dig out of. Young may just be the perfect guy to call on for round two of huge financial crises that the government needs to sort through.

Having done so well in surviving the savings-and-loan crisis, Young, an almost 50-year veteran of the mortgage business, has seen a lot of tough times. As he assumes the role of chairman of the Mortgage Bankers Association (MBA), he can call on all of that experience to rally the industry during the fight that lies ahead.

Jersey Shore

Right out of Toms River High School, Young launched his career in the banking and mortgage business. His first full-time job was as a teller at the Jersey Shore Savings and Loan in Toms River. Young says the choice of career path was simple: The teller job paid 25 cents an hour more than a job at the local A&R

He recalls being so nervous that he set off the alarm five times in the first two days as a teller. So he put a box over the alarm so it wouldn't go off accidentally. Then the state examiners came the next day and wanted to know why the alarm was covered up. Shortly thereafter he was transferred to the tax department, where it was thought he could do less damage.

Young was born in 1942 in Baltimore, where his dad worked for Martin Marietta during the war effort. The family moved to New Jersey when he was just 2. He met his wife, Diane, at Toms River High School in New Jersey (they will celebrate a 50-year anniversary in June 2012). He bought his first home in 1967 in Toms River--the price was $6,000, and it was a Federal Housing Administration (FHA) foreclosure.

Young quickly moved up the ranks at the Jersey Shore Savings and Loan. After three months in the tax department, he was moved over to mortgage originations, where he worked with residential and commercial...

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