BANKING / FINANCE : Mortgage Division Wants Distance From Struggling Thrift
While FarWest Savings in Newport Beach is struggling to comply with new thrift rules, the mortgage banking division it spun off in January is moving ahead with an aggressive growth plan.
FarWest Residential Services in Irvine plans to double its mortgage sales force to 110 employees and expand its nine offices into Central California, said Cliff Piscitelli, the company’s president. The company has about 150 additional employees, mainly handling its $1.65-billion mortgage-servicing portfolio.
The mortgage firm also may soon remove “FarWest” from its name--the last major link between the two--to distance itself from the troubles at the S&L;, which lost $46.1 million last year and now fails to meet three strict capital standards imposed by recent federal law.
“It’s unfortunate. All of us here spent a lot of time at the S&L; and have a lot of friends there, and we wish them no ill will,” Piscitelli said. But at some point, the thrift’s name may become a “detriment” to the mortgage firm’s business, he said.
FarWest Savings’ woes stem from its $535-million portfolio of high-yield, high-risk corporate securities known as junk bonds. Federal law enacted last year requires thrifts to sell junk bonds within five years. The junk bond market has fallen since, forcing massive writedowns at thrifts holding those securities.
As FarWest Savings and other thrifts shrink their assets to comply with the new rules, the door to mortgage business has opened wider for FarWest Residential to grab a bigger share of the market.
The firm has hired mortgage banker Gene Oliver as director of its new creative marketing and development department. Oliver will be in charge of training and hiring sales people, devising new loan packages to sell and developing independent agents, especially in Central California where the company has no presence yet.
Piscitelli believes that the mortgage market is going to approach record levels by this summer. With thrifts sitting on the sidelines, he said, “there will be a bigger pie and fewer players to split it up.”
