| Principal Mortgage to Layoff 500
Company to shift direct lending focus online January 31, 2003 By MortgageDaily.com staff |
| Principal Financial Group announced Wednesday that it will phase out its traditional residential mortgage loan operation by Feb. 28, laying off about 500 employees in 78 branch offices.
Instead of doing business through branch offices, Principal Residential Mortgage will begin solely making loans through its Mortgage Direct operation, which allows borrowers to apply for loans on the telephone or online. The company also will focus more on its correspondent and wholesale distribution channels. The move is not expected to affect borrowers who currently have mortgage loans through the branches, the company said. For branch loans that are in process, Principal will close as many as possible by the end of February. Regarding the employee layoffs, Principal Mortgage CEO Paul Bognanno said the company tried to time the move so that affected employees could take advantage of the robust mortgage market. Mortgage Direct experienced 300% growth during the first three quarters of 2002, Bognanno said. Mortgage loan production rose 17% during that time, with almost all of the increase coming from Principal’s correspondent, wholesale, and Mortgage Direct areas. “This change enables us to direct our resources to higher growth, higher profitability, and lower cost distribution channels,” Bognanno said. “Consumers are increasingly more comfortable with and desire a direct loan origination experience. They also recognize the cost advantages associated with getting their loan via the phone or online.” Over the first three quarters of 2002, Principal’s mortgage production reached $21.2 billion, and its mortgage portfolio reached $102.0 billion. Fourth quarter and full-year production figures are scheduled for release Feb. 5. Shares of Principal Financial Group were up $0.11 at $28.77 near midday, according to CBSMarketwatch.com. |
