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2 Wholesalers Done, 1 Scales Back

Washington SB, New Vision close, Macquarie cuts back

April 7, 2008

By PATRICK CROWLEY


photo of Patrick Crowley

Two wholesale lenders are done, while a third has significantly scaled back operations -- leaving a number of workers unemployed.

Macquarie Bank Limited said in a statement that its Macquarie Securitisation Ltd. unit is winding back its residential mortgage origination services for both retail and wholesale customers "due to the significant increase in the cost of funding mortgages and current conditions in the global mortgage securitization market."

Residential and wholesale mortgage business accounts for "less than one percent of Macquarie Group profits," Macquarie Group Chief Financial Officer Greg Ward said in the statement.

But the move is costing jobs in the Australian-based financial company's U.S. mortgage operation in Jacksonville, Fla.

In March, Macquarie Mortgages USA Inc. gave notice to the state of Florida that it was eliminating 69 jobs by June 30. The notice was made under the Worker Adjustment and Retraining Notification Act, or WARN, a federal law that requires employers to alert state officials of major layoffs.

"There will be no impact on these customers and we will continue to provide to them the range of existing customer services including mortgage variation services," The Head of Macquarie's Banking and Financial Services Group, Peter Maher, said in the statement. "It will be business as usual for our existing customer base. New mortgage business will continue to be written although it will be at much reduced volumes.

According to AllMortgageDetail.com, which tracks mortgage lending activity, Macquaire's U.S. office experienced a significant lending slowdown in recent years.

The company made 803 loans totaling about $270 million in 2006, but in 2005 had made 3,234 loans totaling almost $1 billion. And in 2004, loan volume totaled $1.9 billion on about 8,000 loans.

In Maryland, Washington Savings Bank has also closed its wholesale division, a key executive has confirmed to MortgageDaily.com.

But the move cost just two jobs, said Sue Grant, a senior vice president at the bank.

Wholesale accounted for about one-third of the bank's mortgage business, but employees have been assigned to other parts of the bank, Grant said.

The decision was made because the bank was concerned about selling the loans to investors.

"There's been so much change in the marketplace," Grant said. "We started to think, 'what if we do a loan, will we have a place to sell it?' We haven't received any pushback from investors. We just felt like it was time to leave the business."

Grant said other factors in the decision included the administrative work and cost of processing the loans and the small profit margins on the loans.

The bank's wholesale lending division is less than two years old.

In 2006 the bank made 843 loans that totaled $204 million, according to AllMortgageDetail.com. That was down from 2005, when the bank made 1,828 loans for a total of $428 million.

And another wholesale unit has also apparently closed, this one in Kansas.

National Bank of Kansas City has closed its New Vision Residential Lending wholesale unit. The New Vision Web site now goes directly to the bank's Web site. The unit's phone numbers are also no longer operating. Details on employment and loan volume were not immediately available. Bank officials did not return phone calls to comment.


Patrick Crowley is a feature journalist and blogger for MortgageDaily.com. He is also a reporter, blogger and columnist for The Cincinnati Enquirer.
e-mail Patrick at: [email protected]

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