Mortgage industry sees further company cutbacks
Jacksonville Business Journal - by Rachel Witkowski Staff Writer
NORTHEAST FLORIDA -- Hundreds of mortgage positions in the area have been cut in the past several months as lenders look to compensate for financial difficulties and a lack of investors interested in backing loans.
The most recent consolidation announcement by Seattle-based Washington Mutual Inc. (NYSE: WM) to close about 186 free-standing home loan
offices and discontinue its wholesale business did not directly affect workers in Jacksonville. But the announcement April 8 was a second action to restructure it from wholesale to retail lending after closing four sites with 105 positions in Jacksonville since December.
It also was the next in a long series of closings and cutbacks by several companies affecting the mortgage industry in Northeast Florida.
Two large lenders that moved into Jacksonville late last year promising jobs and business -- Macquarie Mortgages USA Inc. and Heartwell Mortgage Corp. -- have since cut back operations. Macquarie Mortgages recently announced it will soon lay off nearly 70 employees locally and calls to Heartwell Mortgage were greeted by a message indicating a disconnected phone.
Also, HomeBanc Mortgage Corp. recently closed an office on the Southside that employed about 25 loan officers after the company filed Chapter 11 bankruptcy last year. LendingTree LLC laid off 220 employees among three offices throughout the nation, including Jacksonville, in December.
And more recently, the Jacksonville office of Option One Mortgage Corp., the mortgage servicing division of H&R Block, was among those sold to AH Mortgage Acquisition Co. Inc. in mid-March. Option One did not return phone calls.
Lenders and brokers believe the heaviest wave of consolidation in the industry might have passed, but expect more announcements to come.
As of April 16, 251 major U.S. lending operations had "imploded" since late 2006, according to a Web site called The Mortgage Lender Implode-O-Meter -- ml-implode.com -- a forum for reported mortgage industry consolidation.
Washington Mutual was the 249th lender to be listed on the site after it began restructuring, followed by San Ramone, Calif.-based AmeriBanc Corp., which announced in an e-mail to the Web site April 10 that it ceased operations.
Macquarie Mortgages, the mortgage division of Sydney, Australia-based Macquarie Group, moved its U.S. headquarters from Memphis, Tenn., to Jacksonville late last year. But in March, the company reported to the state's Agency for Workforce Innovation that it planned to lay off 69 employees at its local office beginning in May. A Macquarie representative did not return phone calls.
Grand Rapids, Mich.-based full-service lender Heartwell Mortgage made its first move into Florida by opening an office in Orange Park in September and at the time, was in the process of hiring about four loan officers. The office phone line is disconnected, according to a phone company message.
"It's the funding sources. There's such a limited amount of liquidity in the lending area," said Teresa Hale, executive vice president of SunTrust Mortgage Inc.'s local operations.
Some of the mortgage companies not backed by a parent bank were primarily funded through investors buying mortgage-backed securities. But now that there's little interest in that type of investment, many of those mortgage lenders are struggling, Hale said.
Mortgage-backed securities are asset-backed securities that have cash flow through the principal and interest payments set in mortgage loans. Lenders typically sell off a pool of mortgages to investors.
Private-label mortgage-backed securities, which are residential mortgages such as jumbo loans not issued by agencies, decreased in the amount issued by 25.4 percent to $440.8 billion in 2007 compared with 2006, according to the Securities Industry and Financial Markets Association's latest research.
"When the credit market started to collapse last year, the ability to get mortgage-backed security funding for loan programs essentially went away," said Ben Bishop, president of Ponte Vedra Beach-based brokerage Bishop Lending Group of Jacksonville Inc.
Washington Mutual, which recently reported a $1.14 billion first-quarter loss, or $1.40 per share, compared with earnings of $784 million, or 86 cents per share the year before, closed four offices in Jacksonville that worked with local brokers in its wholesale business, including Bishop Lending Group.
Bishop said about a year ago, his company was working with an average of 20 different lenders. Now he works with about five lenders.
The pace of lenders consolidating has slowed, he said, "but it wouldn't surprise me if there's more to come."
rwitkowski@bizjournals.com | 265-2219
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