Banks: We're hiring so we can make more home loans

JPMorgan Chase (JPM, Fortune 500), one of the nation's largest lenders, is in the midst of hiring 1,200 mortgage officers. "We may not be inundated with applications tomorrow, but we are confident the the need will be there," said Christine Holevas, a spokeswoman for JPMorgan Chase.

Housing experts, however, warn that overall mortgage lending is expected to remain flat, largely due to a decline in refinancing.

Loans for home purchases should steadily increase over the next two years to $916 billion, up from an expected $725 billion this year, according to forecasts by the Mortgage Bankers Association. But refinancings should plummet to $474 billion in 2012, down from $717 billion this year.

"It's pretty premature," said Mark Dotzour, chief economist at Texas A&M's Real Estate Center. "They are doing some long-range planning, with the emphasis on 'long'."

More branch-based lending

Chase expects to put its new mortgage lending army in the branches of the former Washington Mutual, which Chase acquired in 2008. It also plans to expand its mortgage lending operations to cities outside its footprint, including Boston, St. Louis and Washington, D.C.

The bank is also shifting to a branch-based lending strategy because it found that these mortgages are much less likely to default. And the bank sees a need in these markets.

"We wouldn't be out there hiring if we thought these people would be sitting around," said Holevas. "We don't think they'll be idle."

Citizens Bank, meanwhile, is also growing its mortgage operations. The Providence, R.I.-based bank, which operates in a dozen states, increased its lending by 167% in 2009, compared to the year before.

Owned by the Royal Bank of Scotland, Citizens ranked as the 24th largest lender in the first quarter of this year, according to Inside Mortgage Finance, a trade publication.

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And they plan to get even bigger, adding 400 loan officers by 2013. This year alone, they are growing the department by more than 100 people.

"There are a significant number of people purchasing homes," said Ellen Steinfeld, senior vice president for home lending solutions. "There is a lot of opportunity for us to increase our lending."

Optimistic view

Not everyone, however, has such a cheery view of the housing market.

It will take time for the mortgage market to rebuild, said Jay Brinkmann, chief economist at the Mortgage Bankers Association. He is predicting banks will issue fewer mortgages this year than last.

"Until the uncertainty in the employment situation resolves itself, you'll find people will be hesitant," Dotzour said. 

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