Popular Sees Opportunity.(Popular Financial Holdings)(Popular Mortgage Servicing)(plannings)

NEW YORK -- There's been a lot of talk about consolidation in the mortgage servicing business, but one financial firm thinks now is the time to jump into servicing.

Popular Financial Holdings, the San Juan, Puerto Rico-based parent of Banco Popular, recently started a new subsidiary, Popular Mortgage Servicing, to facilitate growth in its mortgage servicing business.

Dennis Lauria, senior vice president at the firm, said plans to expand Popular's servicing operation have been in the works since at least 2000. He was hired in February of that year to help lead the business, which will support Popular's mortgage securitization activities.

"They wanted to build a first class servicing operation that would be able to service the future transactions that they knew they would do," he said.

Popular acquired nonprime lending specialist Equity One last year, and at that time loan servicing was largely handled "in the back room," Mr. Lauria said. While the servicing shop remains a unit of Equity One, it now is a stand alone operation.

Under PFH's ownership, Equity One plans to start securitizing loans quarterly, in a volume range of $250 million to $500 million. To do that, Mr. Lauria said the company needed a larger and more diverse group of investors to whom it could sell product.

And to attract those investors, PFH decided that it needed a top-notch loan servicing operation. "They knew we needed to build a servicing operation that was efficient, technologically sound and that gave us growth capacity."