Money Store Inc. is denying rumors that it plans to discontinue two of its business lines.

Late last week word spread among analysts, investors and other home equity lenders that Union, N.J.-based Money Store might be firing dozens of employees and closing its correspondent and home improvement lines.

But chief executive Marc Turtletaub said the reports "aren't at all true."

Money Store will make its correspondent lending division "a little smaller," Mr. Turtletaub said, and move employees from the shrinking unit into its broker division.

"We are tweaking our correspondent business, not exiting it," he said.

Mr. Tur-tletaub said fewer than five employees that were in the correspondent division are leaving the company, but the move does not mean more layoffs are to follow, Mr. Turtletaub said.

Instead, the company expects to increase its overall head count in 1998, he said, in part because he expects to "dramatically grow our mom-and-pop wholesale and retail business."

The wholesale division does about a third of Money Store's origination, said Jennifer Scutti of Prudential Securities.

The company does not disclose how much of the division's orginations are correspondent lending, she said.

Money Store originated $1.7 billion of loans in the third quarter.

Cutting down on correspondent originations has been a popular strategy in recent months, as competition for the bulk loan packages drove prices sky high.

Aames Financial Corp. of Los Angeles announced nine months ago that it was no longer purchasing correspondent loans, and several other lenders have stressed their desire to increase their retail presence.

"Retail lending is just a better cash business," Ms. Scutti said. "Loans originated through correspondents perform differently, and spreads aren't as good," she added.

The move to retail and broker originations may leave correspondents with no choice but to "act like brokers," said Ms. Scutti.

She added that the move would ultimately bring correspondent pricing down.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.