Tricor Repositions Itself as Online Mortgage Provider

Tricor Mortgage Lending, one of Southern California’s fastest-growing loan providers, is expected to announce plans today to reshape itself into an Internet-based lender, changing its name to LoansDirect.com and unveiling a new Web site that promises to close home loans in as little as five days.

The Huntington Beach-based lender, which put itself up for sale in the spring, hopes the new Internet focus will allow it to capitalize on the growing interest on Wall Street in online mortgage providers.

In April, Tricor hired investment banker Friedman Billings Ramsey Group to find investors interested in buying a stake in the company or help it launch an initial public stock offering.

“This will definitely help us in attracting the investment community,” predicted Robert Bernabe, chief financial officer at Tricor.

Though stock prices of online mortgage providers have been dampened by the recent slowdown in mortgage refinancing, online lenders continue to attract interest from traditional financial services companies and others seeking a foothold in the exploding online loan industry, which is expected to exceed $20 billion this year.

Two weeks ago, personal finance software-maker Intuit Inc. said it would pay $370 million to buy Rock Financial Corp., a Michigan lender that has made a big push into Internet lending.

With its own Internet drive, Tricor expects to generate 100% of its loans from the new Web site--www.loansdirect.com--within the next year, up from about 25% today, Bernabe said.

Tricor President Anthony Hsieh said his company will be able to offer lower interest rates and costs because it does not operate branches, as traditional lenders do, and because it originates its own loans, unlike many online companies that simply refer their customers to other lenders in exchange for a fee.

“Since LoansDirect controls the lending process from start to finish, we can ensure high levels of customer service and approve and close loans with unprecedented speed,” Hsieh said.

Tricor’s new Web site will allow borrowers to apply for a loan, lock in an interest rate and closing costs, and receive online approval in about 15 minutes. Checks could be issued to borrowers in as few as five days, officials promised.

If it works as the company expects, Tricor would join a small but growing number of online mortgage companies that can deliver online loan underwriting and approvals. Others include Costa Mesa-based DiTech Funding Corp. and Pasadena-based IndyMac Mortgage Holdings, parent of LoanWorks.com.

But analysts warn that online mortgage-making still faces several hurdles, particularly as interest rates creep up.

Since most online mortgage providers rely heavily on refinancings, the recent slowdown in real estate activity has hurt their business. Industry bellwether E-Loan Inc. recently warned Wall Street that its third-quarter earnings would fall short of expectations.

“There’s been a lot of hype out there,” said Arthur Bender, senior analyst at Sutro & Co. in San Francisco. “I don’t think having a pure online origination franchise makes sense.”

Because so much of the secondary market for mortgages remains paper-based, Bender believes the online mortgage industry will move more slowly than some predict.

Times staff writer Edmund Sanders can be reached at edmund.sanders@latimes.com.