D.C. Area Lending Firms Struggling;Fewer Refinancings, More Competition
A significant drop in refinancings and increased competition is causing a shakeout among Washington area mortgage companies.</br></br>As many as a quarter of the area's more than 400 lenders have gone out of business or merged with other companies during the past year, including some national lenders, such as Merrill Lynch, which shut down its mortgage division in January. Others have closed branch offices and cut their staffs in an effort to reduce overhead during what some industry members are calling one of the toughest times for lenders in recent memory.</br></br>Bill Sinclair, chairman of Washington Federal Savings Bank, which owns First Washington Mortgage Corp., said that "in July 1987, there were over 400 lenders from all over the country in the Washington area. Now I would say that at least 100 of those are gone."</br></br>Rich Becker, executive vice president of the James Madison Mortgage Co. in Fairfax County and vice president of the Washington chapter of the Mortgage Bankers Association, noted that the mortgage market has "turned into the survival of the fittest," despite a relatively strong housing market where the median price of a home has jumped an average of 14 percent in the last year.</br></br>And Victor Peeke, president of Peeke Loanfax Inc., a Gaithersburg mortgage-rate reporting service, said that the future may not be any brighter because of last week's Federal Reserve Board actions that resulted in many banks raising interest rates. "The fear is that the latest interest-rate increase will cause even more of a shakeout" as home buyers shy away from purchasing houses and taking out loans, Peeke said.