Suncoast Savings and Loan Association, a major player in wholesale mortgage banking is about to take aim at the retail market.

Like a number of other wholesalers -- lenders that get their loans through brokers -- Suncoast is trying to guard against any regulatory or market changes that might hurt this business.

Suncoast of Hollywood, Fla., says it plans to open its first retail loan offices this year and hopes that retail will account for as much as 25% of total production within two years. Right now, that share is zero.

Suncoast produced $2.7 billion of mortgages in the 12 months ended June 30 -- all through brokers. That easily makes it one of the top 50 wholesalers in the country, says Thomas LaMalfa, an independent consultant.

Rationale Behind Move

The retail push is "a way of growing and diversifying our risk in a changing business," Albert J. Finch, Suncoast's chairman and chief executive, said in a phone interview.

Specifically, he said, he is concerned that emerging technology may inspire private securitization "conduits" to bypass wholesalers and purchase loans directly from brokers.

Even the federally chartered secondary market agencies could move in that direction, he added. "Nobody has a crystal ball, so what we have to do is position ourselves for whatever comes along," he said.

Many other lenders, including such giants as Countrywide Credit Industries and Fleet Mortgage Group, are now bolstering their retail originations after mounting big pushes in recent years to get loans through brokers and other lenders.

Overreaction Seen

"A lot of people feel they swung too far from one end of the spectrum to the other," said Mr. LaMalfa, who operates out of Shaker Heights, Ohio.

Suncoast, with assets of about $200 million, plans to open its first two retail offices in Northern California -- the hub of its wholesale lending effort. The next move will probably be into Florida, Mr. Finch said.

The Federal National Mortgage Association and the Federal Home Loan Mortgage Corp., meanwhile, said they had no plans to cut out mortgages banks and deal directly with loan brokers.

"Fannie Mae has absolutely no interest whatsoever in changing our fundamental role in the marketplace," said agency spokesman David Jeffers.

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