CrossLand Says Subprime Wholesale Unit Off to Good Start

CrossLand Mortgage Corp. reports business is thriving at the subprime wholesale division it opened last month.

Salt Lake City-based CrossLand, which originates more than $1.6 billion in conventional mortgage loans a year, started OnCall Mortgage in early March. The Emeryville, Calif.-based unit was formed to help CrossLand round out its business line, OnCall president Robert Chrisman said.

The company had been feeling pressure from its account executives to offer a full menu of products to brokers, he said.

OnCall buys loans from brokers and sells bulk pools of loans to other lenders.

The parent company wants to start a division with longevity, Mr. Chrisman said.

"CrossLand has been around for 100 years. It is not a fly-by-night company," he said. CrossLand, a subsidiary of First Security Corp., services loans totaling $11 billion to more than 125,000 customers.

Mr. Chrisman projects that the unit will make more than $30 million in subprime loans a month through its account executives, in addition to loans from CrossLand's brokers.

He said, "When we include CrossLand with our own volume, who knows" how big the business could grow?

Mr. Chrisman, who had worked for a small California-based lender and for Tuttle & Associates in Mill Valley, Calif., was hired after an extensive search by CrossLand. The company had been looking to start a subprime unit since last year, he said.

Part of his job, he said, is to make sure that things don't grow too fast.

"Volume is good," he said, "but if you're unprofitable what difference does it make."

OnCall, which has 17 employees, is adding operations staff as it grows, he said.

The unit makes loans through brokers and sells off pools to other lenders.

"Given that we're a start-up, we're selling everything," he said, "but once we get to the point that we're profitable, we'll look at securitizing."

Wholesale subprime rivals have complained of reduced profitability because of increased competition in recent months.

The margins have been squeezed in the industry lately, Mr. Chrisman said, but are still better than those for prime loans.

"As long as you don't grow too fast, and keep a careful eye on underwriting and procedures, it's still a good business," he said.