Walter Industries builds new profit strategy

Homeowners may be gaga over today's near-record low interest rates, but Walter Industries has been less than ecstatic.

Many of the Tampa homebuilder's customers are refinancing their mortgages with other lenders. Doing so has robbed the company's lending unit of potential profit and has left its loan-servicing staff twiddling their thumbs.

So what's a company to do? Try something founder Jim Walter couldn't have imagined doing back in 1946, the year he began building low-priced homes on buyer-owned lots.

Walter began to adjust a little more than a year ago when it created Walter Mortgage Co., a Fort Worth, Texas, subsidiary that allowed it, for the first time, to offer refinanced loans to its customers.

Now, the company has decided to start buying and servicing loans originated by other lenders. Leading the charge is senior vice president of financial services Joe Troy, who previously served as senior vice president of corporate finance at NationsBank in Tampa.

"It's nice to be able to take a specialty that you have and expand it beyond the captive business," Troy said.

The company is starting small. It has budgeted up to $30-million to buy loans this year, a drop in the bucket compared with the $1.7-billion of loans, most of them subprime, that it already owns and services. The loans will be bundled and used as collateral to borrow the necessary funding.

But combined with several other housing-related initiatives -- including subdivisions built on company-owned land and the acquisition of other builders -- Walter hopes its loan-servicing staff soon will be busy again.

"We've got a pretty big infrastructure that we've got to leverage," Troy said.

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