Magazine article American Banker

Subprime Mortgage Lender Fighting Slim Margins with Web-Only Format

Magazine article American Banker

Subprime Mortgage Lender Fighting Slim Margins with Web-Only Format

Article excerpt

A subprime home lender is shuttering its branch and office space in an all-Web bid for profits.

WMC Mortgage Corp. this week announced that it had recast itself as an Internet-only lender that will work mainly with other businesses. During the prior two weeks, the Woodland Hills, Calif., mortgage bank closed its 26 retail branches and eight wholesale offices and cut its staff by about 75%, to 200 people.

Henceforth, WMC said, it will take all its loan applications online. "We're finding we can offer much better service for brokers and customers, and produce a higher-quality loan at a better price," over the Internet, said Scott McAfee, WMC's president.

WMC also said it had gotten a $25 million investment from Cendant Corp., and the two companies formed a strategic alliance in which Move.com, a homebuying and relocation Web site owned by Cendant, would send subprime homebuyers to WMC.

At a time when dot-com enterprises that market directly to consumers are suffering huge losses and investor backlash, WMC is remaking itself into a business-to-business Internet company. Though the privately held company operates a Web site, homelender.com, where consumers can apply for loans, it is devoting most of its resources and attention to wmcdirect.com, a site for use by mortgage brokers.

WMC's move to a 100%-Internet business model is a response to fundamental changes in the subprime mortgage market in the past two years, Mr. McAfee said. In early 1998, when subprime lending was still a hot industry, companies could sell their loans for as much as 106% to 107% of face value. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.