Golden West Bucks Trend By Increasing Originations

Golden West Financial Corp., long a legend in the thrift industry for its tight cost control, is now showing a flair for expanding its mortgage originations.

As other big thrifts posted sharp declines in lending volume, Oakland, Calif.-based Golden West boosted its originations 8% through July this year, to $2.6 billion.

The gain is especially noteworthy because Golden West, parent of World Savings, concentrates on adjustable-rate mortgages. These are generally are out of favor with consumers, who want to lock in low-interest, fixed-rated mortgages.

Herbert Sandler, cochief executive of Golden West, said the growth partially reflects an increase in the thrift's sales force. But other than that, he offered little explanation for the disparity between his originations and those of his competitors.

"We aren't doing anything different from what we've done in the past," Mr. Sandler said.

Success Secret?

Rivals and mortgage brokers suggested that one of the thrift's secrets is a product called Quick Qualifier, which waives income verification for borrowers who make down payments of at least 20%. Such mortgages, known in the trade as "low docs," often appeal to self-employed people.

The Golden West product, which has been offered for years, is now one of the few low docs left on the market. Most lenders, as well as secondary-market agencies such as the Federal National Mortgage Association, have pulled back, fearing delinquencies.

Golden West's loan, however, is considered a conservative low doc because the thrift investigates the source of down payments and does careful property appraisals. The company's nonperforming assets amounted to just 0.92% of total assets in June, versus an average of 3.33% for its peers, according to an analysis by Smith Barney, Harris Upham & Co.

Stricter Credit Standards

Golden West historically has adhered to stricter credit standards than its rivals, analysts said. As a result, it was well positioned for the recession and housing slump, which have forced some competitors to tighten standards. The tightening has contributed to origination declines at many thrifts.

H.F. Ahmanson & Co. and Great Western Financial Corp., the nation's two largest thrifts, have cut back significantly on loans they were making against down payments of just 10%, First Boston Corp. analyst Eric Hemel wrote in a June report. Golden West never accepted such low down payments and "has not lost anything here, unlike its peers," he wrote.

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