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Aggressive Growth Planned at New Firm

The founder of Wilmington Finance Inc. has launched a mortgage banking firm that specializes in government lending. By next year, the new venture hopes to be originating nearly $0.5 billion with 200 employees.

New Penn Financial LLC began originating in May, founder, President and Chief Executive Officer Jerry Schiano told in a statement.

But this isn’t Schiano’s first time building a mortgage company from the ground up.

He also founded Wilmington in 1999. That company, which was acquired by AIG subsidiary American General Finance Inc. in 2003, eventually grew to 2,000 employees and originated $15 billion.

Wilmington consolidated retail operations in June 2006, one month after replacing Schiano as CEO, and ended wholesale mortgage banking originations in June 2008.

Schiano’s latest venture primarily focuses on loans insured by the Federal Housing Administration, though 10 percent of the Plymouth Meeting, Penn.-based firm’s activity will be agency business. He expects this year’s originations to be $125 million, while 2009 production is projected to reach between $350 million and $450 million.

Most of the business is currently originated from New Penn’s consumer direct channel through direct mail and Internet leads.

But the company is making a push into affinity relationships, where regional and local community banks and credit unions can offer their customers FHA programs without obtaining FHA approval. That channel will roll out this fall and operate from Charlotte, N.C.

Jerry Schiano

Another channel, targeted at portfolio servicers, focuses on refinancing borrowers into FHA loans.

“We expect significant activity in this channel for the next couple of years until the mortgage market settles,” Schiano said. “We are currently in the process of launching our first customer portfolio program with a significant hedge fund.”

New Penn has no plans to open a wholesale lending channel.

Last month it acquired Stenton Mortgage Inc., and this month it acquired the assets of Universal Trust Mortgage.

The company currently operates from Columbia, Md., and Plymouth Meeting with almost 100 employees. Half of the current staff arrived from Universal. By the end of next year, another 100 hires are planned, though “we will grow prudently and modify our plans as required.”

Schiano, whose 20 years’ experience includes a stint at Conti Mortgage, said he realizes the risk of operating in today’s market and hopes to capitalize on a low-cost model that isn’t saddled with legacy issues.

“We know that there is no room for error in this market,” he said.

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