Magazine article American Banker

Calif. Wholesalers Closing Offices as Demand Sags; the List Includes Directors Mortgage, Independence One, and Crossland

Magazine article American Banker

Calif. Wholesalers Closing Offices as Demand Sags; the List Includes Directors Mortgage, Independence One, and Crossland

Article excerpt

Courtesy Funding Corp., the wholesale lending division of Directors Mortgage Loan Corp., has closed three of its eight offices in response to much lower volume.

"If the production isn't coming in, you don't need the people in there," said Robert Garman, senior vice president.

Courtesy, based in Riverside, Calif., is not alone. Several lenders have closed wholesale branches recently. And many more are considering such a move.

San Diego has been particularly hard hit, with 24 lenders, including Courtesy, closing wholesale operations in the area. Others are Independence One, Crossland, and Imperial Credit.

Rate Hikes Blamed

Lenders said wholesale loan production has plunged as interest rates have climbed since February.

"Wholesale right now is not a real profitable business," Roxy L. Root, president, Union Security Mortgage Inc., Santa Ana, Calif.

At La Jolla, Calif.,-based American Residential Mortgage Corp., for example, wholesale loan production in the first six months of 1994 is roughly half what it was during the same period last year.

"If the market itself is off by 50%, so should our staff levels and our overall levels of volume," said Steve Attwood, American Residential senior vice president. "Anyone who has been in this business long enough should have known that."

American Residential has not closed any wholesale branches. But the lender cut 276 employees in May, a 12% reduction.

American Residential has also drastically scaled back its wholesale operation, closing 15 of 75 satelite processing centers since March. …

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