Discover May Enter Mortgage Business

September 20, 2010 No Comments »

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Despite the ongoing housing crisis, there may be a new player in the mortgage industry in the next few months.

Discover Financial Services, better known for hawking credit cards to consumers, could get into the direct mortgage business.

Chief Executive David Nelms told Reuters today that the company was looking to grow in light of weak demand for plastic, and could move into offering things like checking accounts and mortgages.

The company already offers savings accounts after becoming a bank holding company back in 2009, and could soon offer more robust consumer banking services.

Nelms noted that the move could be both organic or inorganic, meaning they could build the business from the ground up or acquire a company already doing business.

He said potential targets aren’t “necessarily that large, but things that could give us a good platform.”

The move could put even more pressure on mortgage brokers and the dying wholesale lending space, which saw its share of the mortgage market fall to just over 10 percent in the second quarter.

On Friday, Discover announced it would pay $600 million for Citigroup’s private student lending platform Student Loan Corp.

Shares of Discover (NYSE:DFS) ended the day up 59 cents, or 3.79%, to $16.16, not far from the 52-week high of $17.35.

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