Poor performance of broker originated mortgages has led a Missouri bank to abandon the channel. But the company is optimistic about its retail operations.
First Bank Mortgage is scuttling its wholesale division.
Mark Turkcan, president of the St. Louis-based lender, confirmed the closing in an interview with MortgageDaily.com.
The company will, however, stay in the retail business.
Turkcan declined to say how many employees are losing their jobs but said the division generated about $250 million in originations annually. First Bank does about $250 million in originations in his retail division as well, he said.
Two California locations — Irvine and Walnut Creek — are being closed.
“We will have some layoffs” in the wholesale operation, Turkcan said. “It’s been a tough market in places like California, Las Vegas, Florida. Those markets are going to take a couple of years to recover.”
Turkcan said other companies, including major players such as Bank of America, have exited the wholesale business.
“Frankly, loans originated through wholesalers, through brokers, have not performed as well as retail loans,” he said. “Our other bank presence is in the Midwest. We’re an established retail operation, we’ve been around for about 50 years.”
Turkcan said the company’s retail operation is actually growing. First Bank recently hired about 10 employees from other companies that have closed or down sized. He believes the industry will move toward more retail operations instead of using brokers and wholesalers.
“Consumers now understand brokers are not necessary working on their behalf,” Turkcan said.
The wholesale operation is about 20 years old. On its Web site, the company said it offered jumbo loans to $3 million, conforming and non-conforming loans and Alt-A products.
Turkcan he said he believes while some markets will continue to experience problems, more conservative midwest locations such as St. Louis, Cincinnati and other cities and regions are beginning to already recover.
“Those places don’t have the dramatic swings … and I think the market is already coming back,” he said.
