Online Bank ING Direct USA is shutting down its wholesale mortgage business.
The U.S. operations of the Netherlands-based global insurer, recently acquired by Capital One Financial (COF), stopped originating mortgages through brokers as of April 3. Brokers can still submit loan applications taken on or before April 3 to ING until May 3.
ING said it would stop acquiring home loansfrom correspondent lenders effective April 10. Partners have until May 10 to submit loans initiated on or before April 10.
Executives at Capital One said they planned to reduce the assets of ING’s mortgage-backed securities portfolio due to the prepayment risk of the securities held in that portfolio.
ING is in the midst of repaying a 2008 bailout it received from the Dutch government.
In January, the insurer said it would not pay a dividend to shareholders until it had repaid all of the state aid it received during the financial crisis. ING is divesting noncore assets as part of an $13.5 billion bailout with the Dutch government. Those assets include $1.6 billion in residential mortgage-backed securities in the United States. The Capital One purchase of ING for $9 billion fits under that mandate.
The group also has to split up its banking and insurance assets by the end of 2013 to comply with requirements attached to the bailout.
Other banks, including Bank of America (BAC), Citigroup (C) and Ally Financial, have exited from or scaled back in the brokered mortgage or correspondent lending markets.
ING focuses on jumbo loans and adjustable-rate mortgages and ranks 20th in the nation for overall originations.
