Wilmington Out of Wholesale; AIG Unit Will Shed More than 300 Jobs
It apparently hasn't taken long for new CEO Robert Willumstad to have an impact at wounded insurance giant American International Group, Inc. (AIG), after the departure of his predecessor Martin Sullivan. Wilmington Finance, Inc., AIG's U.S.-based mortgage lending arm, said Tuesday that it will cease wholesale mortgage banking originations effective immediately. The company will honor the existing loan commitments in its mortgage banking pipeline and will maintain a reduced retail operationin the wake of the shut-down of its wholesale origination platform. Wilmington is a wholly-owned subsidiary of American General Finance, Inc., and has been engaged in the business of originating non-conforming residential real estate loans directly and through mortgage brokers, and selling those loans to third party investors. Obviously the non-conforming business isn't what it used to be -- if anything, market observers that spoke with HW wondered what took AIG so long in terms of shutting Wilmington down. Approximately 335 positions will be eliminated as a result of Wilmington's wholesale exit; the company said in a press statement that it will provide outplacement assistance to affected employees. A separate filing with the Securities and Exchange Commission said that the wholesale exit will cost AIG $27 million before taxes in the second quarter as it pays to end leases. Disclosure: The author held no positions in AIG when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.