National City Mortgage prepares for lean times (i.e layoffs)

These mortgage companies have hired anyone who could smoke a mirror the past few years - promising them a rewarding career in the exciting mortgage banking business. Well, they're laying 'em off as fast as they can now...

Drive around Phoenix and it seems every new office complex has a mortgage banking company. Wonder who'll move into their space?

Every business has its cycles. The trick, two local mortgage industry executives say, is dealing with the current cycle while preparing for the next one.

That's what Leo Knight Jr. and Paul E. Bibb are trying to do at National City Mortgage, the mortgage lending arm of Cleveland-based National City Corp., operator of National City Bank.

Knight, 60, currently is chairman of the mortgage company. As president and chief executive officer from 1989 through 2000, and as chairman and chief executive since then, Knight has guided National City Mortgage through unprecedented growth as interest rates plunged and home sales and refinancings skyrocketed.

In 1998, for example, National City Mortgage originated $19 billion in mortgage loans. Five years later, that figure had grown to $106 billion. Along the way, the company made a series of rapid-fire acquisitions and increased its payroll today to roughly 7,500 employees in 400 offices nationwide.

But business conditions have changed. Interest rates are rising, the demand for mortgages and refinancings is dropping and the industry is flooded with too many lenders chasing after too few loans, Knight said.