Commercial -- Next Up at Countrywide: Coastal Capital Team Hired to Build Conduit Lending Business
Shenn, Jody, American Banker
Most of Countrywide Financial Corp.'s efforts to diversify over the years have leveraged its powerhouse position and expertise in single-family home lending.
Until recently its investment banking unit stuck to home mortgage-related activities, such as brokering servicing rights and underwriting and trading mortgage-backed securities. Most of its insurance products are house-related, including captive mortgage reinsurance and lender-placed homeowner's policies.
And its bank grew fast by taking deposits of funds held in escrow for servicing customers.
Now the Calabasas, Calif., company is trying what could be a bigger stretch: financing commercial real estate.
On Thursday it hired the principals of Coastal Capital Partners LLC of Sausalito. The team will work to build a commercial mortgage origination and securitization business.
Countrywide will engage in conduit lending, in which loans are originated with an eye toward quick securitization -- not to be held on its balance sheet. One similarity between conduit lending and Countrywide's traditional domain is that they are both trading businesses that rely on the secondary market.
In an interview Thursday, Ron Kripalani, the chief executive of the new division's immediate parent, Countrywide Capital Markets Inc., said conduit lending is a "way of leveraging our existing [securities] distribution network," as well as diversifying.
Countrywide's after-tax earnings nearly tripled last year, to $2.4 billion. But the sharp drop in single-family originations nearly all forecasters are predicting as refinancings dry up would make things more difficult for the company.
The commercial real estate group has a staff of 17 but plans to have as many as 40 workers by yearend. It will originate loans nationwide through offices in New York, Chicago, California, and Toledo, Ohio, Mr. Kripalani said.
He called multifamily lending a "logical extension" for the company but said it was not limiting itself to financing apartments.
According to a Mortgage Bankers Association survey, multifamily lending made up 43% of the commercial mortgage originations reported last year. Overall commercial originations surged 34%, according to the survey.
Mr. Kripalani would not guess at how much lending the group would do this year. It is focusing on the long term, he said. "We're going to do this methodically, like we've done with every business."
His unit also includes Countrywide Securities Corp., which was named in January to the New York Fed's list of primary dealers in U.S. Treasury bonds.
Before Countrywide hired the principals, Coastal provided a range of origination, evaluation, and structuring advisory services for borrowers, lenders, issuers, and investors. …