December 28, 2008
By BARRY SHLACHTER
barry@star-telegram.com

Some mortgage lenders, having laid off support staff during the past year's meltdown, are finding themselves deluged with refinancing requests as rates fall below 5 percent. And the lenders have fewer back-office workers to handle all the paperwork.

At Bank of America's Countrywide unit, 300 employees who had been dedicated to home-equity lines of credit have been shifted to handle the surge in mortgage applications, spokeswoman Jumana Bauwens said. The Calabasas, Calif.-based lender, with a large processing facility in Fort Worth, has seen applications double in December over November, Bauwens said. Paul Peebles, a mortgage broker with Grapevine-based Old Capital Lending, said the crush has gotten so fierce that some major banks have "tapped the brakes" on new requests by raising their interest rates on conventional, 30-year mortgages a point or two above competitors'.

"With all this [work force] contraction at banks in the past year, the support staff is not there," Peebles said.

Some lenders are having their employees work over weekends to complete loan documentations within 30 days. Others have responded by lengthening the lock-in period.

"We have seen refinance applications increase threefold since early November," said Gregg Hassell, a Houston-based spokesman for Chase Bank. "To make sure customers get the rate they apply for, Chase is using 60-day rate locks while we process the loan." Previously, it guaranteed quoted rates for 45 days.

Rates began dropping sharply after the Federal Reserve said it would purchase mortgage bonds to provide liquidity to the market.

Fort Worth-based Colonial National Mortgage says that it has added staff because of all the new business but hasn't seen processing problems.

"Certainly our volume of business is up, but not to the extent we have difficulties handling them," said David Motley, Colonial's president. Its mortgage rate dropped to 4 3/8 percent on a conventional, 30-year note, then kicked back up to 4 7/8 , he said.

Colonial did not dabble in the subprime mortgage market. Nonetheless, it cut back its operations like many lenders, closing offices in hard-hit areas like Florida, Ohio, Indiana, California and Arizona, Motley said. The shutdowns reduced Colonial's operations by 20 percent.

In recent months, Colonial has rebounded by opening offices in Plano, Austin and Oklahoma, although overall staffing is still down about 10 percent. And Colonial is hiring. "We are looking to adding a few people," Motley said. "We had excess capacity until the rate dropped." Colonial is seeking production staff, underwriters and closers.