Chase Manhattan Corp.'s subprime mortgage lending arm is planning dramatic expansion in 1997.
In fact, the Woodcliff Lake, N.J.-based subsidiary is planning to more than double origination volume this year, said Doug Potolsky, a Chase senior vice president who heads the subprime unit, Chase Manhattan Funding.
In January of 1994, Chase Manhattan tapped the 17-year employee to help it ease into the high-profit arena of subprime mortgage lending.
Since then, Chase Manhattan Funding has been buying loans from a broker network and selling them in batches to finance companies. Servicing is handled by Advanta Mortgage USA, Fort Washington, Pa.
In 1996, the division originated about $315 million in home loans to borrowers with blemished credit. But Mr. Potolsky has big plans for 1997. He expects volume to be close to $800 million this year.
The key to the increase? An expanded originations menu. This year, Chase Manhattan Funding will look beyond the broker-only network it was founded on and initiate correspondent and retail originations, Mr. Potolsky said.
In fact, the unit is developing a program, due out next month, to purchase closed loans from correspondent lenders. Mr. Potolsky said the unit will purchase loans from, among others, correspondents already aligned with Chase Mortgage, the bank's A-quality home lending unit.
On the retail side, Chase Manhattan Funding is examining its telemarketing options and training loan officers at Chase Mortgage's branches to originate subprime loans.
In addition, the unit will begin securitizing loans to sell to Wall Street, with the first transaction expected to close next quarter.
Hiring sales personnel with experience in the subprime field is crucial to insuring success, Mr. Potolsky said. Since January, Chase Manhattan Funding has beefed up its sales force from 10 to 50, just to cover its broker channel. By yearend, Mr. Potolsky expects to hire 20 more salespeople for the broker network.
