Gateway Funding keeps on fighting
The mortgage lending company has felt the pain of the industry, but it also has benefited from it.
One morning this month, Bruno Pasceri almost shuddered at the latest bad news for the mortgage industry.
"We're just taking mortars every day," the president and chief executive officer of Gateway Funding Diversified Mortgage Services L.P. said of the industry during a recent interview at the Horsham company's headquarters.
So far this year, mortgage lenders have announced plans to cut nearly 40,000 jobs, according to Challenger, Gray & Christmas Inc., a Chicago consulting firm, and news reports. Fifteen lenders have sought bankruptcy protection since December and at least 100 have halted operations or sought a buyer, Bloomberg News said. Countrywide Financial Corp., the nation's biggest mortgage firm, drew down $11.5 billion in credit lines on Aug. 15 and took in a $2 billion investment from Bank of America last week.
Gateway has shared in the pain, cutting 100 jobs from January through March, reducing its workforce to 749, because business slowed so dramatically.
The privately held company is projecting that it will originate just shy of $3 billion in mortgages this year, 30 percent less than last year and far less than the $5 billion it had budgeted.
Things could be worse.
Pasceri said Sandi Sicilia, Gateway's senior vice president who handles sales of mortgages into the secondary mortgage market, urged him 18 months ago to back off riskier mortgages, including investor loans with no money down and no documentation of income. She "was just dead right on target," he said.
Stuart A. Feldstein, president of SMR Research Corp. in Hackettstown, N.J., which analyzes the mortgage and home-equity loan markets, said Gateway's lending profile was slightly more risky than average.
But having dodged the worst of the mortgage turmoil, Gateway is picking up business from bankrupt lenders, such as American Home Mortgage's operation from Maryland down to the Carolinas, which could bring in $75 million a month in business, Pasceri said.
Gateway operates in 42 states, with its biggest markets in New Jersey, Massachusetts, Pennsylvania and Florida.
Pasceri anticipates further difficulties. The banks that lend to mortgage lenders may require them to put up more of their own money for each loan.
"I'm sure that's the next hurdle we're going to have to battle through," he said.