E-loan to exit mortgage business
US-based online lending platform E-loan is to quit the mortgage origination business after posting an $87.4 million net loss in the third quarter.
The company, started in 1997, and a big player in the online mortgage lending business, is operated by Puerto Rica-based Popular Inc and its North American subsidiary Banco Popular, which reported a reported a third-quarter net loss of $139 million.
Popular, Inc. has made the decision that E-LOAN will no longer operate as a direct mortgage lender in 2009.
Employees have been given 60 days' notice of layoff, and that E-Loan will cease operations as of January 9, 2009, according to multiple sources. Some processing staff will remain to close-out existing loans. It is not clear how many employees will be affected.
In a statement, the company said the closing of its US banking operations was a response to the economic downturn. Banco Popular intends to shut down at least 40 branches in its 139-strong national network as it seeks to boost its capital position and clean up its subprime-hit balance sheet.
The closure of the E-loan mortgage book to new business is expected to save $37 million annually. The company says E-loan will continue to service outstanding loans, and offer FDIC-insured certificates of deposits and savings accounts.
In light of the significant changes and challenges in the mortgage industry, the company cut over 500 jobs as part of a restructuring plan in November 2007 in an effort to focus on loans only eligible for repurchase by Fannie Mae and Freddie Mac.
The company has already suspended the acceptance of new "Home Equity" Wholesale loan applications.
Customers who have already obtained loans through E-LOAN will not be affected.
Find out the status of lenders nationwide with the popular website "Mortgage Lender Implode-O-Meter" at http://ml-implode.com