US Internet bank E*Trade has funded more than $1bn worth of new mortgages through LoansDirect since its acquisition of the online mortgage originator on February 1 2001. A further $583m loans are currently in the pipeline.
E*Trade Bank has become the exclusive source of funding for LoansDirect, leveraging a financial services model that includes mortgage origination in addition to banking, brokerage and other wealth management services. These are all provided through E*Trade and its subsidiaries.
By securing funding exclusively through E*Trade Bank, LoansDirect can realise significant cost savings and eliminate its dependence on third-party warehouse lenders.
Since E*Trade's acquisition three months ago, monthly volumes at LoansDirect are continuing to rise, reaching $385m during April 2001 as compared to $308m during March 2001. This was a record month-on-month increase of 25 per cent.
In addition, LoansDirect generated gross revenues of nearly $15m since the acquisition through origination points, loan-related fees and gain on sale of loans. This gross revenue is estimated to continue at the rate of $5 to $6m per month going forward.
Mitchell Caplan, managing director, North America and chief global banking and wealth management officer of E*Trade Group, says: "With the ability to originate and the capacity to fund, we streamline the mortgage origination process to increase value for our customers and we enhance profitability to increase value for our shareholders."
According to E*Trade, mortgages are currently the third most widely used financial service product on the Internet.