Magazine article American Banker

General Electric Quits the Retail Side of Home Loan Business

Magazine article American Banker

General Electric Quits the Retail Side of Home Loan Business

Article excerpt

Mortgage giant GE Capital Mortgage Corp. says it will no longer make home loans directly to the public.

The retail marketing efforts have never been a big source of loans, and the company has decided to wind down the business over the next few months, according to a spokesman.

"It would take too much in the way of resources to focus on those areas to ever be extremely profitable," said spokesman Michael J. Kachel.

"We just decided to affirm our current and longtime strategy of focusing on servicing and insurance," he said.

Retail originations accounted for only $66 million, or 7% of total originations, in the first half of this year, Mr. Kachel said.

Several sources outside the company said the exit was apparently hastened by losses in retail.

The retail program never took off, said one source, and the executive in charge of it, Ray Sims, left GE several months ago when it became clear that the company would change its strategy.

Mr. Sims now holds the No. 2 position at Knutson Mortgage Corp., Bloomington, Minn.

"There has been more sizzle than there was substance" to the program, according to another knowledgeable source who is close to executives at GE.

The program has lost money and is being eliminated as part of a broad directive from parent GE Capital to build income at the mortgage unit, the source said.

Gregory Barmore, chairman of the unit, began the program in 1991 through a turnkey computerized loan originations system called Residential Express. …

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