Magazine article American Banker

Lenders Split on Preparing for Refi Boom's End

Magazine article American Banker

Lenders Split on Preparing for Refi Boom's End

Article excerpt

Mortgage lenders agree that the refinancing boom, now two years old, will fizzle someday. But opinions differ on whether they should -- or even can -- start preparing now, or must simply deal with the drop when it happens.

Coming down on the side of preparation is Stephen DiMarco, the senior vice president in charge of production for MidAmerica Bank in Chicago. "People who are not thinking with perspective about their operations now are going to be dead," he said.

Mr. DiMarco said he thinks about the end of the refi boom all the time. "I have to be worried about tomorrow -- that is one of my primary jobs. I can't go to the officers of my bank and say, 'Sorry guys, production is going down.' "

Planning is critical because of the time needed for implementation, he said. Many firms, especially small lending and brokerage operations that aggressively built capacity to capture refi business, will need to compensate fast for the lost revenues -- or face the prospect of layoffs.

"I can't imagine anyone is up for laying anyone off," Mr. DiMarco said.

He said that he has a three-pronged preparation strategy.

First, over the past year he has developed a 10-person team that concentrates on generating more loan business in the Chicago area's minority and immigrant communities. A year ago the bank had just "one or two people working on this market," he said. "We will continue to expand this division. We think the emerging markets in Chicagoland are going to be a savior for us."

Second, Mr. DiMarco said he is looking to hire more loan officers with real estate contacts to focus on purchase loans rather than on refis.

"The average loan production per person is going to decline when the boom ends, so I have to have more individuals to make up for that downturn," he said.

Last, MidAmerica is expanding its offerings in adjustable-rate mortgages, Mr. …

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