The rocky mortgage market is taking a toll on the industry's top executives.
Wild market fluctuations are starting to burn them out. Mortgage companies acquired by commercial banks are struggling with culture clashes. And banks, disappointed by weak financial performance at mortgage units, are looking to reshuffle management rosters.
The upshot: Three chief executives of top 10 mortgage companies have resigned in rapid succession in the past three months.
Mark L. Korell, formerly with GMAC Mortgage Co., was the first, resigning in May. He was followed by David Frank, who stepped down in June as chief executive of Chemical Banking Corp.'s mortgage unit, and by Fred B. Koons, who quit as head of Chase Manhattan Mortgage in July.
At first, the recent flurry of resignations surprised some mortgage industry watchers.
"It is odd," said Allen Gutterman, who as president of Response Professional Placement has helped several prominent mortgage executives land their jobs.
But he said he expects to see more comings and goings, given the banking industry's voracious appetite for mortgage companies.
"This is going to occur continuously as mortgage bankers and traditional bankers come together," Mr. Gutterman said.
"Mortgage bankers traditionally operate on impulse, while bankers do more planning. It's a different world, and sometimes they just don't fit well together."
The mortgage industry, as any lender knows, is cyclical, following the gyrations of interest rates. Uncertainty about where business is headed can cause the head of the unit a great deal of anxiety, wearing him down.
Mr. Korell, for instance, said he's got a case of temporary burnout, brought on by the uncertainty of the mortgage market with a volatile interest rate environment and rising competition.
He isn't ready to retire, but he has decided to take the summer off to climb mountains in Colorado. And he thinks other executives would do well to follow his lead.
"I've never heard of it in this industry, but I think it would be a good idea to give key executives a 90-day sabbatical after four or five years to reenergize," Mr. Korell said.
Such a practice would help companies retain high-level executives and keep them more productive, he said. For his part, Mr. Korell plans to return to the job market - probably in the mortgage industry - in the fall.
Besides the daily strain of the ups and downs of the market, industry consolidation has added stress to mortgage companies bought by commercial banks.
Commercial banks, known for having a conservative streak, often find it difficult to absorb mortgage banks, with their more freewheeling ways.
Culture clash was exemplified by Chemical's acquisition of Margaretten Financial Corp. one year ago.
When Mr. Frank, Margaretten's entrepreneurial mortgage chief, was put in charge of Chemical's mortgage unit, sparks flew, to no one's surprise.
"The problem with the mortgage business is that banks don't understand it," said a mortgage banker who worked for a company that was acquired by an industry outsider. Banks that bought mortgage companies at the top of the market are probably not getting the returns they anticipated, and often have trouble integrating the two businesses, he said.
"Someone's got to fall on the sword," this mortgage banker said. And most often, he added, it's the person most closely identified with the source of the problem - the head of the mortgage subsidiary - who takes the fall.
A mortgage company acquired by a parent not accustomed to the ups and downs of the mortgage business may also encounter pressure for performance.
In an interview with American Banker shortly after his resignation, Mr. Frank said he was faced with a difficult year due to increasing interest rates. And he apparently grew uncomfortable working within the confines of a large banking company.
"You always want somebody running your place who wants to be there," Mr. Frank said at the time. "While I've been here, I couldn't pursue other things, but found myself wanting to."
Stanford L. Kurland, managing director at Countrywide Funding Corp., Pasadena, Calif., said he thinks the rough year may have influenced all three executives' decisions to leave.
"I think the issue is one of culture clash that exists between a smaller mortgage bank with an entrepreneurial style being merged into a large bank or corporation," Mr. Kurland said. It is difficult to make a perfect fit, he said.
Many companies were disappointed by the performance of their mortgage units last year, he said. While mortgage bankers are accustomed to the tremendous cyclicality of the business, banks are not.
"I doubt it's coincidental," Mr. Kurland said.