Mortgage company Washington Mutual Inc. is exiting the islands, laying off 81 employees.
Residential lender
vacating islandsWashington Mutual Inc.
is folding here as part of
a national consolidation
Struggling mortgage lender Washington Mutual Inc. said yesterday it will shut down all of its operations in the islands, throwing 81 Hawaii employees out of work.
The local closure is part of a nationwide consolidation at the Seattle-based thrift, which entered Hawaii's market two years ago during an aggressive expansion push but has suffered a sharp drop in mortgage lending income as interest rates rise and demand for home loan refinancings tails off.
Hawaii's fifth-largest mortgage lender said, however, that the move will not affect borrowers who have closed on loans.
"This won't have any impact on any loans that are already funded. We will continue to service the loans through our remaining operations on the mainland," spokesman Adrian Rodriguez said.
Rodriguez also said all loan applications that are "in the pipeline" but have not yet closed will be processed to completion, by a mainland branch if necessary. The company ceased accepting new business as of Monday.
Hawaii is one of 17 states that Washington Mutual is pulling out of, saying it wants to concentrate its lending activities in markets where its retail banking division Washington Mutual Bank has a presence. The bank does not operate in Hawaii.
All four of the company's offices in Hawaii will close. These include two offices in downtown Honolulu, one in Kahului, Maui, and one in Kailua-Kona on the Big Island. All closures and layoffs will be completed by the end of September.Loan sales officers with a proven track record of productivity should have little trouble finding work elsewhere in the mortgage market, but most staff such as clerical workers will likely find it more difficult, said Jasen Takei, president of the Mortgage Bankers Association of Hawaii.
"Their closing is pretty indicative of the industry. There is a lot less demand for loans than before. So as an industry there is an excess capacity of mortgage companies," he said.
However, Washington Mutual had consistently offered Hawaii customers lower rates than its competitors, said Anders Hostelley, Oahu Branch Manager for competitor Wells Fargo Home Mortgage Inc., and the company's departure could take some pressure off competitors.
"We've had to come down a lot because of them," Hostelley said. "If we were offering 5.75 percent for a loan with two points, they'd often be at 5.5 percent. We couldn't figure out how they were doing it."
Ultimately, Washington Mutual's aggressive pursuit of greater loan volume backfired as the Federal Reserve Bank embarked on a long-term strategy of rate hikes, which has helped to chill mortgage lending.
Still, the company's pullout from Hawaii is not expected to have a major impact on the choices available to consumers, said Tom Zimmerman, president of Hawaii HomeLoans Inc.
The market here is dominated by a handful of lenders such as First Hawaiian Bank, Bank of Hawaii, Countrywide Home Loans Inc. and Wells Fargo Home Mortgage, but there are several dozen mortgage dealers for prospective borrowers to choose from in Hawaii.
"As far as mortgages go, there is enough capacity here to absorb those loans," Zimmerman said.
By the same token, the departure of a major player like Washington Mutual will benefit other companies, he said.
"When that happens, everybody gets more business," he said.
Washington Mutual did $737 million worth of mortgage lending in Hawaii in the first half of 2003, fourth in the state, according to data from Title Guaranty Hawaii. But it slipped to a distant fifth in the first half of this year with $512 million.
