Colonial Savings announced Thursday that it will cease originating mortgages and focus instead on its servicing and banking businesses.
“In light of changing market dynamics and a strategic evaluation of its business operations, the company has decided to streamline its services and reallocate its resources,” the company said in a press release.
While it plans to shut down originations on July 31, the Texas institution promised that by retaining its servicing, it will be able to offer continuous support to existing customers.
“All outstanding mortgage loans will continue to be serviced in accordance with the terms and conditions of the agreements. Customers can expect uninterrupted access to their accounts,” the bank said.
Although Colonial Savings is exiting from originations, it will remain a fairly large mortgage servicer with a $20 billion portfolio.
The departure from originations represents a significant change for the federally chartered thrift, which was founded in 1952 under the name Fort Worth Mortgage Corp. and operates a network of six consumer and consumer banks in North Central Texas.
Many mortgage lenders have been shutting down operations or engaging in mergers and acquisitions following a rapid rise in rates over the past year. The increase in borrowing costs has diminished loan volumes and challenged industry profitability.
“We are deeply grateful to our employees, customers and partners for their unwavering support and loyalty throughout the years,” Colonial Savings President David Motley said in a press statement. “It is with a heavy heart that we make this difficult decision, but we firmly believe it is the right course of action for the company’s future.”
