Deutsche Bank is closing its correspondent lending group slightly more than three years after it was formed to purchase closed nonprime loans from originators on a bulk and loan-by-loan basis.
The correspondent operations will be consolidated into the closed loan purchase division, the wholesale lending division of Deutsche Bank's MortgageIT subsidiary, which the bank acquired in July of 2006.
"One of the big reasons for the consolidation is the changes last week [the week of July 30] from investors and the types of programs they will still purchase," an official in the correspondent division's office in Madison, Wis., told MortgageDaily.com. "A lot of those products that were being offered through the [correspondent lending] group no longer exist because there's no one purchasing them. That's happened to a large extent with second lien loans.
"There will be some product changes. But we're still ironing out what product mix we'll have," he explained. "We're hoping to be able to still hang on to some of them or to at least have something similar, especially in the Alt-A environment."
But purchases will include agency products and "some other things" that hadn't been available through the unit, the official pointed out.
The consolidation was revealed in a letter sent on August 9 to loan originators who have been selling loans to the correspondent group -- which in June 2004 Deutsche announced was launched.
"We've got a similar correspondent program in our wholesale lending division through MortgageIT, where we provide the same services," the Deutsche official explained. "In the next few days, or in the course of the next week, we're going to be calling all the [correspondent lending group] clients and giving them information about how and when they can begin doing business with us through this new consolidated group."
The division's staff has already begun working with past sellers of loans to the correspondent lending group to get them integrated into the systems so they can begin selling to the Deutsche Bank subsidiary "as soon as possible," he explained.
Meanwhile, in coming weeks, the August 9 notice stated, all loans previously locked will be reviewed for purchase "if the loan file is delivered on or before the lock commitment expiration." If the loan file is acceptable, the unit will be "diligent in purchasing the loan in a timely and efficient manner," the notice explained.
"The [Mortgage IT] team will be contacting you shortly," the notice concluded, "to discuss this transition as it relates to products, operations and the opportunity to continue selling closed loans to Deutsche Bank through [Mortgage IT]."
The consolidated operation will function under the leadership of Keith Bilodeau in Madison, according to the notice.
A Deutsche Bank spokeswoman, asked by MortgageDaily.com about loan volume at the correspondent lending group and the number of employees and customers affected by its closing, said the bank never reveals detailed information about employees, clients and loan volume.
"Our competitors would love to have such information," she commented. But, "a very small percentage of people left."