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Bank of the Ozarks Exits Secondary Market Home Lending

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Bank of the Ozarks of Little Rock will stop originating home loans for resale on the secondary market, a line of business that had “operated at essentially break-even,” a spokeswoman confirmed Tuesday. 

Exactly how many employees are affected is not clear. BOZ’s website listed 39 licensed mortgage originators in five states as of Nov. 14, including 14 in Arkansas. A mortgage operation also includes assistants, processors and underwriters, and the pipeline of loans already in the works can take as long as 60 days to clear out.

The bank will continue to originate some home loans through its CRA (Community Reinvestment Act) mortgage lending group and its community bank group, spokeswoman Susan Blair said in an email to Arkansas Business. Two ranking mortgage bankers, Gene Holman and George Schaefer, “will continue to run the other business functions they have historically overseen,” she said.

“No offices will be closing, since all offices in which mortgage lenders are housed provide other products and services to customers,” Blair said. “Some mortgage personnel will be displaced, but we hope that many, hopefully the majority, will apply for and transfer to other open positions in the bank.”

At least seven “potentially displaced” employees have accepted other positions in the bank since the decision to shut down the secondary market home loan business was announced internally on Monday, she said.

BOZ blamed the post-recession regulatory environment for making home loans “challenging from a profitability perspective.”

“All secondary market loans we have originated have been resold shortly after origination, so this decision will have no noticeable impact on our balance sheet,” Blair said. “Our secondary market mortgage loan program has operated at essentially break-even, so this change will have no meaningful impact on our profitability.  

“Since the Great Recession, regulatory requirements for mortgage lending such as QM, TRID and HMDA have constantly increased making it more difficult and more expensive to originate these loans, all resulting in this business being challenging from a profitability perspective.”

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