Major Mortgage Lender Grabs Even Bigger Market Share

Wachovia Corp., a major U.S. home loan lender, is grabbing more mortgage business as a result of the recent shakeout in the industry.

Five of the top 40 mortgage lenders, responsible for more than 9 percent of last year’s mortgage production, have gone out of business, according to Wachovia CEO Kennedy Thompson.

• Other major mortgage companies, such as Washington Mutual and Countrywide mortgage, have scaled back their operations.
• By contrast, Wachovia, which last year dramatically expanded its mortgage business by acquiring Golden West Financial, has been expanding.

In the first two months of the third quarter, the home mortgage company’s outstanding mortgages have shot up about $1.2 billion.

“This marks a change from what we’ve seen over the past two years in the mortgage market,” he said.

Thompson said the profitability of the mortgage business also is improving as rivals that were offering newfangled products at discounted mortgage rates either close up shop or slim down their product offerings.

That is helping to fatten profit margins in the industry.

Although rivals are warning that tumbling home prices nationwide will hurt their mortgage businesses, Wachovia believes its mortgage loans have been prudently underwritten and won’t suffer from a spike in defaults.

“We think we are well-positioned with our model to do extremely well in this environment,” Thompson said.

SOURCE: Wall Street Journal