The credit card and personal loan company has been in the mortgage market since 2008, having acquired the consumer loan portfolio from Green Tree Servicing. Recently, however, they have seen a decline in their mortgage originations and have been gradually winding down their mortgage operations over the past few years.
The move affects Discover’s online mortgage platform, where customers can apply for home loans. When the program was launched in 2008, it was aimed at providing customers with an easier option for obtaining a mortgage. The lender offered several products, including a government-backed loan, plus fixed and adjustable-rate options. However, mortgage originations on the platform have decreased significantly over the past few years.
As of August 31st, 2019, Discover had loan balances totaling $7.8 billion compared to the $9.5 billion balances reported in the same period in 2018. This suggests that their portfolio has experienced a considerable decline over the past year. It appears that the decision to exit the mortgage business is part of the company’s strategy to concentrate on more profitable products such as credit cards and personal loans.
The move marks a significant shift in the competitive landscape of the mortgage industry. It is likely that the move will affect other online mortgage lenders who are competing for a share of the market. With one less player in the market, other mortgage providers may find it easier to gain a larger market share.
It is also worth noting that Discover’s decision to exit the mortgage business may be related to the recent changes in the mortgage lending industry. Lenders have been facing increased scrutiny from regulators over the past year, and the current environment of low interest rates is making it difficult for companies to make a profit from mortgage products. As a result, some lenders have opted to scale back or even exit the mortgage market to focus on more profitable lines of business.
In conclusion, Discover’s decision to exit the mortgage market is a significant move that will have far-reaching implications for the mortgage lending industry. The decision could have both positive and negative consequences, depending on the company's reasons for leaving the market. It is likely that other lenders will benefit from Discover's exit and may be able to increase their market share. In addition, the move may be indicative of a larger trend in the industry, with more lenders opting to focus on other, more profitable products. Whatever the case may be, it is clear that Discover's decision to exit the mortgage business will have a lasting impact on the industry.
This article was contributed on Jul 28, 2023
