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Friday, Mar 29, 2024

Have Loans, Need Help

Have Loans, Need Help By CARLOS MARTINEZ Staff Reporter While many companies are laying off workers and cutting expenses, Calabasas-based mortgage lender Countrywide Credit Industries is struggling to fill 2,000 new positions spurred by its burgeoning mortgage lending business. As the nation’s third largest provider of home loans, Countrywide is experiencing its biggest growth surge in history, thanks largely to a refinancing frenzy resulting from rock-bottom interest rates. Countrywide’s rapid growth has left it with an unusual problem finding enough qualified applicants to get its work done. Leora Goren, Countrywide’s managing director of human resources, said the company has been actively seeking qualified loan originators, information technology specialists and customer service representatives to fill 2,000 vacant positions. “The majority of the positions are on the mortgage origination side, but we also need a lot of IT people,” she said. Countrywide hopes to take advantage of a local unemployment rate that continues to rise. According to a UCLA Anderson School of Management economic forecast report released last week, Los Angeles County has lost 21,000 jobs since January, 3,000 during October alone. But while the county’s unemployment rate increased to 5.9 percent in October, from 5.2 percent a year earlier, it’s meant little to Countrywide. With the boom in the refinancing business, experienced loan originators have been hard to come by, Goren said. “There just aren’t that many around, it seems.” Goren said the company, which runs a so-called “home loan university” in Texas, is unable to fill its loan origination slots with recent college graduates because of the sheer number of openings it has. “We’re also looking for people who have experience and can hit the ground running,” she said. The company’s Internet business, which now accounts for more than a third of its loan originations, is also in need of qualified people who know the industry, she explained. Since October, the company has been advertising in Monster.com and trade publications to fill the openings. The company’s expansion is fueled by a rapidly growing refinancing business that has doubled in the last year. In the quarter ending Aug. 30, Countrywide posted $149.2 million in net income on $1.23 billion in total revenue, up from the $91 million in net income on $848.8 million in revenue for the same period last year. S. Alan Rosen, a Calabasas-based attorney who advises banks, said Countrywide albeit the biggest is not the only lender to benefit from the refinancing boom. Nor is it the only lender straining under unprecedented workloads. “As a result of the significant drop in the interest rates, there has been an incredible increase in the volume of refinancing, so appraisers and loan brokers industrywide are going crazy trying to keep up,” Rosen said, adding that the sheer volume of refinancing could bring interest rates back up, although that has yet to happen. “It’s simple supply and demand and the rates are staying low so far.” San Francisco-based Wells Fargo & Co., for instance, reported for the quarter ending Sept. 30 overall refinancing increased to $23.3 billion from $19.6 billion during the same period last year. At the other end of the spectrum, loan activity at an independent bank like First Commerce Bank of Encino jumped to $66.6 million during the quarter ending Sept. 30, from $49 million a year earlier. “The market environment is such that we foresee this growth continuing,” said Countrywide COO Stanford L. Kurland, who also serves as CEO of the company’s Countrywide Home Loans subsidiary. During October, Countrywide processed a record $27.9 billion in loans (surpassing its previous record of $21.3 billion set in August) and had an average of $1.14 billion in daily loan applications, Kurland said. “We’re continuing to see good results and growth that is tied directly to these low interest rates,” he said. Kurland said the growth in the business has taken the company by surprise in some ways, as it has slowly been adapting to the growth spurt that began last year. “We’ve acquired some buildings in Simi Valley in order to expand our operation and make it more efficient,” he said of the former Bugle Boy Jeans facility Countrywide bought earlier this year. With the two new buildings, a 74,000-square-foot office building and a 230,000-square-foot warehouse converted into offices, Countrywide now has an estimated 1.2 million square feet of office space in Simi Valley alone. “We hope to centralize our loan servicing in Simi Valley where we can bring in more people to expand the service,” Kurland said. The company’s other operations, such as its insurance, home appraisal, title insurance, escrow services and its new Treasury Bank unit are also seeing growth, thanks largely to Countrywide’s estimated 3 million home loan customers who are gently steered to those services, Kurland said. “We don’t have to do a big ad campaign to grow those businesses,” he said. “We just put in a mailer in the envelope along with the mortgage statements.” The company’s growth spurt, however, has failed to excite Wall Street so far. Countrywide’s stock closed Tuesday at $42.16 a share, well off its 52-week high of $52 reached on Jan. 4. Check on Friday David Verlander, a New York-based portfolio manager for Basswood Partners, said Countrywide is undervalued and could make an attractive takeover target. But he cautioned that the company’s profitability is vulnerable to declining interest rates and the impact of the economy on its huge mortgage servicing portfolio, which becomes more important as loan origination fees decline and less lucrative servicing fees become a primary source of revenue. This refinancing boom, however, won’t be ending anytime soon, experts say. Jonathan Gray, an analyst with Sanford Bernstein Inc., said the continued drop in interest rates means continued growth for Countrywide for at least the next few quarters. He said it’s unlikely interest rates will be heading back up as the country copes with a recession. Already, industry experts say the U.S. Federal Reserve Bank will likely lower the rates again before year’s end. “The sense that I have is that that will be the last of the interest rate reductions,” said Rosen. “But we’ll still see mortgage rates at historically low levels for some time.”

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