"This business, it's like a relay race," Schiano told me later in his office. New Penn made Federal Housing Administration loans when only FHA was funding mortgages. It sold to Fannie Mae and Freddie Mac when they got back on their feet. It sells to Wells Fargo, now the dominant U.S. home lender. It does jumbo loans, for big houses.
Schiano welcomed the "market disruption" five years ago: "My belief was, if you could stay focused, if you had money to lend, you could do business right through it, and be in the right place - where the market comes to you."
New Penn expects to close $6 billion in 2013 home-purchase and refinancing loans, up from $4 billion last year.
Schiano's act plays to a tough crowd. A report earlier this year by Moody's Investor Services analyst Kathryn Kelbaugh rated New Penn "Below Average" for its loan-sales finance operation that converts loans in to securities, complaining its record is "too recent to assess correctly."
"They're comparing us to JPMorgan and Credit Suisse," Schiano says. "Moody's is right that we are a new issuer. We feel very comfortable in our practices and procedures."
I asked why New Penn uses Texas-based Selene Finance to service loans even though Selene is rated "D" by the Better Business Bureau. Schiano acknowledged Selene's past issues, and said that's why he plans to build an in-house loan-servicing business at New Penn.
A Long Island native, Schiano joined the Horsham office of ContiMortgage Corp. in 1992. Conti grew quickly by financing first-time homebuyers - many of them troubled borrowers in inner-city neighborhoods - but went bankrupt amid rising consumer complaints in 2000.
The year before, Schiano had left to start home-lender Wilmington Finance, backed by Delaware's WSFS Bank. Worried about a culture clash, Schiano was reassured when conservative WSFS boss Marvin "Skip" Schoenhals told him: "I don't care if you wear a tie. Just do the business plan."
Wilmington Finance grew quickly in that era of liberal credit. In 2003 the bank sold it, at a profit of more than $42 million, to insurer American General. Schiano stayed three years, building the staff to 2,000, and yearly loan sales to $15 billion. He left in 2006, "lucky," he says, to go before U.S. home-lending collapsed and American General's owner, American International Group, cut its mortgage business.
Schiano's non-compete agreement lapsed in 2008 and he started New Penn. In 2011, his New York backers were bought out by Shellpoint Partners, headed by Lewis Ranieri, the onetime Salomon Bros. banker portrayed in Michael Lewis' best-selling Liars' Poker as the working-class pioneer of modern mortgage financing.
New Penn's lesson, according to Schiano: Stay flexible, and resist conventional thinking.
"If you have the smarts to buy when people tell you you shouldn't, in many instances it works out well. It's worked for us."
Contact Joseph N. DiStefano at 215-854-5194, JoeD@phillynews.com, or @PhillyJoeD.