E-Loan exiting out of loan business

0 Comments | Oakland Tribune, Oct 23, 2008 | by Eve Mitchell

Pleasanton-based E-Loan, a pioneer in the world of online lending, will stop issuing new loans sometime in the next few weeks.

The news was announced when the online lending firm's Puerto Rico- based parent company, Popular Inc., released disappointing third- quarter earnings Wednesday. Popular reported a $668.5 million loss for the quarter ending Sept. 30.

E-Loan, which is part of the company's Banco Popular North America unit, currently has about 275 employees. "We are working through on their transitions and who will be impacted," said Juan Carlos Cruz, vice president of public relations and media for Illinois-based Banco Popular North America, said Thursday.

Customers who have already obtained loans through E-Loans will not be affected, he said.

"It will be seamless," said Cruz.

A downturn in the United States economy prompted Popular Inc. to reduce the size of its banking operations here, the company said in a statement.

Banco Popular North America reported a third-quarter net loss of $139 million, of which $87.4 million pertained to E-Loan. E-Loan representatives did not return phone calls.

"Any business right now that relies on the debt market is going to suffer," said Cory Reid, vice president of the California Association of Mortgage Brokers and founder of Moraga-based Fountainhead Mortgage. "Unfortunately, there are a lot of people that will lose their jobs. It has consolidated over time."

While it will stop making new loans, E-Loan will continue to provide certificates of deposits and savings accounts, which are insured by the Federal Deposit Insurance Corp.

E-Loan was co-founded in 1997 by Janina Pawlowski and Chris Larsen to provide consumers with online access to mortgages, home equity, auto and student loans.

Last year, E-Loan announced it would shed more than 400 jobs from its Pleasanton headquarters.

Eve Mitchell covers real estate and personal finance. Reach her at 925-952-2690 or emitchell@bayareanewsgroup.com