O2 Funding, Foothill Ranch, Calif., late this week closed its East Coast mortgage production operation, electing to concentrate on West coast lending, according to industry officials familiar with the matter.
A call to the company was not returned by press time.
Industry consultant David Lykken of Mortgage Banking Solutions, Austin, Texas, while not commenting on the O2 situation in particular, said it’s a sign of a broader issue. The business is seeing a retrenchment in loan production operations as companies elect to concentrate only on those markets that they are strong in, he said.
Lykken noted that companies are getting out of states where there is even a perception of increased legal risk. They don't want the exposure, he said.
Another problem, Lykken said, is the intense regulatory burden and costs brought about by the National Mortgage Licensing System. If the origination volume is not there, they don't want the risks.
