Magazine article American Banker

Mortgage Loan Slump Takes Big Bite out of Execs' Wallets

Magazine article American Banker

Mortgage Loan Slump Takes Big Bite out of Execs' Wallets

Article excerpt

The slump in mortgage lending has taken a heavy toll on executive paychecks.

Some top mortgage executives saw their bonuses disappear entirely last year as rising interest rates battered lending volume and net income, according to a review of recently filed proxy statements.

The bonuses of John F. Farrell Jr., chairman of North American Mortgage Co., and Terrance G. Hodel, its president, were chopped to zero from more than $800,000 each in 1993.

Jess Hay, chairman of Lomas Financial Corp., also received no bonus, down from $360,000 in 1993. William Kirschenbaum, chairman of Hamilton Financial Services Corp., took a zero bonus after receiving $115,000 in 1993.

Even executives who continued to get bonuses received substantially less than in the previous year. As a result, total compensation for top mortgage executives was uniformly down.

The main culprit last year was a nearly 25% decline in originations industrywide. With thrifts taking increasing market share, the mortgage banking companies were hit even harder, often having drops in volume of 40% to 50%.

Company profits - and hence executive pay - tumbled as originations income fell and companies absorbed the costs of cutting staff and closing offices, said Carl D. Jacobs, a Woodland Hills, Calif., consultant.

Based on proxy statements filed so far, the highest-paid mortgage executive of 1994 was Salomon Levis, chairman and chief executive of Financial Carribbean Corp. …

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