Banks: We’re hiring so we can make more home loans

CNNMoney.com — Several banks are gearing up to do a whole lot more mortgage lending in the future.

Even though new homes sales were at a historical low in May and the housing market in general is in the doldrums, these banks are hiring hundreds of loan originators, getting ready for what they believe will be a significant pick-up in lending.

JPMorgan Chase (JPM, Fortune 500), one of the nation’s largest lenders, is in the midst of hiring 1,200 mortgage officers. “We may not be inundated with applications tomorrow, but we are confident the the need will be there,” said Christine Holevas, a spokeswoman for JPMorgan Chase.

Housing experts, however, warn that overall mortgage lending is expected to remain flat, largely due to a decline in refinancing.

Loans for home purchases should steadily increase over the next two years to $916 billion, up from an expected $725 billion this year, according to forecasts by the Mortgage Bankers Association. But refinancings should plummet to $474 billion in 2012, down from $717 billion this year.

“It’s pretty premature,” said Mark Dotzour, chief economist at Texas A&M’s Real Estate Center. “They are doing some long-range planning, with the emphasis on ‘long’.”

Chase expects to put its new mortgage lending army in the branches of the former Washington Mutual, which Chase acquired in 2008. It also plans to expand its mortgage lending operations to cities outside its footprint, including Boston, St. Louis and Washington, D.C.

The bank is also shifting to a branch-based lending strategy because it found that these mortgages are much less likely to default. And the bank sees a need in these markets.

“We wouldn’t be out there hiring if we thought these people would be sitting around,” said Holevas. “We don’t think they’ll be idle.”

Citizens Bank, meanwhile, is also growing its mortgage operations. The Providence, R.I.-based bank, which operates in a dozen states, increased its lending by 167% in 2009, compared to the year before.

Owned by the Royal Bank of Scotland, Citizens ranked as the 24th largest lender in the first quarter of this year, according to Inside Mortgage Finance, a trade publication.

Full article by Tami Luhby here: http://money.cnn.com/2010/06/24/news/economy/mortgage_lending/index.htm?section=money_realestate&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_realestate+%28Real+Estate%29