The McCue Mortgage Company, the third-generation family home financing business headquartered in New Britain, is getting out of the loan origination business.
“It made no sense to continue originating loans,” William McCue, president and son of the founder, said, citing increased regulation and competition from larger firms.
This unit employed about half of the company’s employees, and was the feeder of work to its loan servicing operations, which will continue at One Liberty Square in downtown New Britain, McCue explained yesterday
However, nearly all the affected employees will either immediately move over to similar jobs at Homestead Funding Corp., a larger, but still family-owned, mortgage company, or have the opportunity to do so as business in the unit winds down.
They won’t have to change their commute. Eight loan originators and processors are already in training for their new jobs, but will return to their old space, as Homestead will sublease from McCue. Former McCue operations manager Kim Nielsen will head Homestead’s new New Britain branch office.
“It was sad to see the change,” she said. “It was just the dynamic of the marketplace.”
Nielsen, a McCue employee for 30 years, also saw the arrangement as a “perfect match.”
“They have the same culture, with several generations [of family] on the staff,” she said. Because of their multistate licensing, it will allow financing of second homes in popular areas such as Florida.
It was an arrangement orchestrated by McCue to secure jobs for the company’s employees, some of which have been there for decades. There is no financial or partnership link between the two.
McCue said he made the decision to pull out of the origination business after years of trying to compete with bigger firms and deal with growing federal and state regulation. It was difficult to recruit and train salespeople, and then compensate them effectively.
“There’s more to making a loan than getting them into a house,” he said. “It’s keeping them in the house, and working with them” when things go wrong.
A group that at that one time totaled 25 just a few years ago was down to eight yesterday. The company employed 40 prior to the changeover.
“The final issue was when the state expanded the time it takes to foreclose from six months to three years,” he said, noting that each money-losing event cost much more in lost revenue, since the servicing operation over time effectively pays for the sale of a mortgage.
Homestead, founded and continuing to be run the Rutherford family, is similar in many ways to McCue. “It’s a family company, where people are most important. They recognize their people and treat them well, McCue said. As a larger company - they are licensed to do business in 30 states versus McCue’s Connecticut focus - he believes they will provide new opportunities for the salespeople and support staff moving over.
“They do a great job in a pressure-cooker business,” he said.
McCue smiled when he talked about what the company has done for the community, including 75,000 loans since its founding 68 years ago.
“This is the first day since November 11, 1949, that we have not been in the loan origination business,” he said. “We have tremendous pride and satisfaction. We were able to share the thrill and enthusiasm of people buying their first home.”
“But it’s time to redirect our efforts.”