Countrywide Credit Industries is well on its way to opening more than 70 branches this year and expects to open 60 in each of the next five years, its chief executive said.
At a secondary market conference here, Angelo R. Mozilo also said he expects significant growth in the company's servicing portfolio. He said Countrywide's macro-hedge strategy would permit it to expand servicing safely; the company maintains a long position in government bonds, which rise in value as rates fall and borrowers prepay.
Countrywide is also planning an entry into the $4 trillion European market in the next 18 months, Mr. Mozilo said.
The mortgage banking environment is among the best in recent history, driven by demand for homes and a healthy economy with low inflation and low interest rates, he said.
The purchase market is "solid and growing," Mr. Mozilo said. "Almost everybody wants to buy a home. ... "We just have to facilitate it."
But the Countrywide executive focused most of his remarks on emerging opportunities and trends shaping an industry certain to face further consolidation and change.
Hot topics on lenders' minds, he said, include the use of the Internet, global expansion, and creating ancillary products and services.
Entering the global mortgage market may not be smooth sailing for U.S. companies because of differences in language and culture, Mr. Mozilo said. Mortgage banking overseas is less customer-focused, less advanced technologically, and has inefficient systems for origination and servicing, he said.
Mr. Mozilo, who recently visited France, Germany, Ireland, and England, noted that European nations depend on the private sector for the development of the mortgage market.
Nevertheless, Countrywide plans to "have its toe in the water" there soon, he said. "If it is cut off, we'll have nine others," he quipped.
In discussing opportunities, Mr. Mozilo called the subprime business "a very troubling market" because so many players are involved and the potential for fraudulent lending practices is high.
He said the Internet had helped expand business by creating more "indirect" applications for Countrywide.
The Internet is a "very important entry point for us to get to the consumer," Mr. Mozilo said. About 30% of the purchase loans Countrywide recently originated started with Internet inquiries, he said, and in five years the Net will be the largest channel for originations.
However, he said, the Internet will never replace the "high-touch" segment of the market-immigrants and the technologically unsophisticated.
"We have a bifurcated society in America," Mr. Mozilo said.
He noted that Countrywide has worked to diversify its business lines-to be involved in the "food chain of the mortgage." It is involved in appraisals, credit reports, homeowner insurance, home warranties, and the issuance of credit cards because these business lines help lower mortgage costs, he said.
Another speaker at the secondary market conference, Marito Domingo, senior vice president and treasurer at Washington Mutual Inc., discussed concerns from the perspective of a portfolio lender.
Lenders are benefiting from using voice response units and telephone centers for origination and servicing, Mr. Domingo said at a session on the future of mortgage lending. They are also using electronic transfers of files-not just credit scores-for underwriting, he noted.
In the future, Mr. Domingo said, originators will be able to use prepayment analysis to create different mortgages on the basis of credit risk and prepayment risk profiles.
As for consumers, technology has helped make them more "savvy and sophisticated," he said. A small but growing number use Web sites instead of mortgage brokers, he noted.
Nevertheless-and except for refinancing-lending is still a business in which consumers want to "kick the tires" and deal with realty agents, Mr. Domingo said.
The blurring of A, alternative-A, and A-minus loans has also added emphasis to the "high-touch" interaction with consumers, he said. And with the growth of Hispanic and Asian communities, lenders are coming up with innovations in underwriting and structuring products, Mr. Domingo said.