ETrade Begins Mortgage Lending Again

March 16, 2009 No Comments »

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E*Trade Financial is reportedly back in the mortgage business after previously exiting both the retail and wholesale lending channels, according to TheStreet.com.

The online brokerage, which saw its own share price slide from the $20 range to mere pocket change after taking mortgage-related losses, will apparently begin offering a small range of loan programs via third-party outsourcer PHH Mortgage.

The company plans to offer conventional fixed mortgages and adjustable-rate FHA-backed loans, but not riskier products such as home equity loans, the very loans that sunk the company back in 2007.

Of course, this time around things will be different because PHH will assume the risk for the mortgages, as they won’t end up on E*Trade’s balance sheet.

PHH will essentially handle much of the loan process, including underwriting, processing, and servicing, while E*Trade will market the loan products to its existing customers and the general public.

An E*Trade spokeswoman told TheStreet.com it chose to begin offering mortgages again because it felt it was an important product offering for a full-scale bank, but some speculate it’s only doing it to be eligible for TARP funds.

The company applied for $800 billion in funds in November, but has yet to hear if its request has been approved.

E*Trade has been in a precarious position for some time now, prompting a marketing campaign aimed at proving its stability by touting the number of new accounts it was opening on a daily basis.

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