Express America Holdings Corp. said it is dropping originations, the last vestige of its Scottsdale, Ariz.-based mortgage operation.
Nationwide mortgage originations have been dramatically reduced during the past 12 months in reaction to rising interest rates and the company can no longer profitably originate mortgage loans, according to the announcement.
Thus, Express America joined the parade of companies exiting the originations business. Two days ago, Wells Fargo Bank announced it was eliminating its entire originations operation and dismissing 450 people. It expected to continue to offer mortgages in its branch offices through a third party.
Earlier, Bank of New York Co. said it was liquidating its California- based mortgage banking unit, Arcs Mortgage Corp.
And Keycorp will lay off 250 employees of mortgage divisions that acquire loans through other lenders and brokers. Both Keycorp and Bank of New York were unable to find buyers.
Said Robert W. Stallings, Express America's chairman and chief executive: "I regret this decision, which market conditions force me to make. Express America will devote substantially all of its capital and energy to developing the mutual fund money management business that it will acquire from Pilgrim Group Inc."
As previously announced, Express America has agreed to purchase the rights to manage five mutual funds from Pilgrim for a total of $28 million in cash and the assumption of certain operating liabilities. This transaction is expected to close next month.
Express America's staff will wind down its mortgage origination business over the next 60 days.