In strategic shift, TIAA to close dozens of mortgage offices

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TIAA Bank plans to close roughly 65 mortgage origination offices across the country — a move that should reduce costs as the company concentrates more heavily on home lending to its existing customers.

The $36.9 billion-asset bank acquired the home loan offices, which are mainly located along the East and West coasts, as part of its 2017 purchase of EverBank Financial. After they are shut down, consumers will still have the opportunity to apply for a TIAA mortgage online or over the phone.

“The changes we’re making will enable us to deliver mortgage solutions to even more people, using digital technologies that enable clients to work with us efficiently and easily, anywhere and at any time,” Blake Wilson, TIAA Bank's chief executive, said in a press release.

U.S. Bancorp will assume the leases on approximately 40% of the home loan offices, according to TIAA spokesman Michael Cosgrove. The Minneapolis bank will offer jobs to a similar percentage of the affected employees, he added. Financial terms of the agreement between the two banks were not disclosed.

The remaining TIAA mortgage offices, which make up roughly 60% of the total, will be closed, and their employees will be laid off, Cosgrove said.

U.S. Bank spokeswoman Rebekah Fawcett described the deal with TIAA as an opportunity to add experienced and talented employees.

“Coupled with our digital offerings, this extension of our retail branch mortgage service will be a benefit for our customers in key markets across the United States,” Fawcett said in an email.

TIAA’s retreat from the brick-and-mortar mortgage business comes at a time of falling consumer demand. Higher interest rates have bitten into the mortgage refinancing business in particular, and that has led various lenders to reduce their workforces. Just last week, HomeStreet Bank in Seattle announced that it will try to sell its stand-alone mortgage business and portfolio of servicing rights, citing rising interest rates and high home prices as factors contributing to reduced consumer demand for mortgages.

TIAA Bank, which is based in Jacksonville, Fla., is part of New York-based TIAA, a provider of retirement accounts that has nearly 5 million customers.

The decision to abandon loan production offices may make more sense for TIAA Bank than it would for some other mortgage lenders, according to Garth Graham, a mortgage industry consultant.

With its large base of existing customers, TIAA Bank should be able to spend much less on marketing than competitors that are trying to develop new customer relationships, he said.

At the same time, TIAA will be able to eliminate the costs associated with operating brick-and-mortar offices, particularly the cost of paying sales forces in numerous local markets.

“Trying to attack the sales cost is certainly a valid strategy,” said Graham, a senior partner at Stratmor Group.

Terry Wakefield, another industry consultant, agreed that the office closures should enable TIAA Bank to reduce its per-loan costs. “It’s always been more efficient in the mortgage industry to originate loans in centralized environments,” he said.

As part of the EverBank acquisition in 2017, TIAA also acquired 10 bank branches, all of which are in Florida. Those branches will remain open.

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Originations Expense management Layoffs M&A Digital mortgages TIAA U.S. Bancorp