130 to lose jobs in closing of RSA Mortgage - Fiserve Automotive to remain on site

RSA Mortgage, a division of financial technology and services firm Fiserv, is shutting down in early January, laying off all 130 employees -- including founder Andrew Shaevel.

Fiserv executives said Wednesday that they're closing the Amherst-based mortgage origination and servicing unit on Jan. 5 because the 2-year-old business hasn't met expectations.

In particular, the company faltered due to declining mortgage demand overall and its inability to grow enough of a client base for its business of generating mortgage leads for other lenders, said James Puzniak, group president of Fiserv Lending Solutions, who oversees RSA.

"All of the lenders are looking for different channels and we thought that would be a great opportunity," Puzniak said. "But it was a new idea in the marketplace, and sometimes new ideas don't come to fruition as quickly as you'd like."

He declined to release details on the unit's profitability or revenues, but said it's a small part of Fiserv's business.

RSA Mortgage contracted with other mortgage and home equity lenders to generate leads, originate loans and provide private-label servicing for loans under the other firms' names. The company is a licensed mortgage broker in 47 states and Washington, D.C.

The decision does not affect the related Fiserv Automotive Solutions remarketing business, which employs 200 workers at the Amherst site. That business manages, markets and sells cars that are coming off leases, and includes the original business of Remarketing Services of America that Shaevel and Stuart Angert founded in 1991. Angert retired this year.

RSA was acquired by DaimlerBenz AG in 1996 and by Wisconsin-based Fiserv in 2001. The company focused on the automobile market until two years ago, when it ventured into mortgages and other lending.

Last December, the mortgage and automotive businesses were split up, with the car side being merged with Fiserv LeMans to form the current Automotive Solutions. The mortgage side became RSA Mortgage, part of the RSA Solutions business that also works with banks on consumer lending programs. Both continued to grow, holding job fairs this year to fill 30 auto and 50 mortgage positions.

Still, that wasn't enough to overcome the challenges, as the company entered the mortgage business after it peaked at a record $3.5 trillion in mortgages in 2003, and just before the Federal Reserve in June 2004 began two years of rate hikes that started to dry up demand. Mortgage rates are only indirectly influenced by Fed actions, but still went from a low of 5.24 percent in June 2003 to about 6.5 percent in a matter of months, according to Banxquote.

Total lending fell by a fifth in 2004 and profitability dropped, forcing major banks and other lenders to sharply curtail operations, close offices, and lay off staff because of overcapacity. Despite a pickup in 2005, the Mortgage Bankers Association expects $2.46 trillion in total loans for 2006, and says that will drop again to about $2.1 trillion for both 2007 and 2008.

"Basically, it was a combination of market conditions and our plans just not working out to the extent that we wanted them to," Puzniak said. "It was not meeting our expectations."

RSA employees were notified on Monday. Officials said they will try to help them find work elsewhere within Fiserv or will offer outplacement services. Officials are also negotiating with Shaevel about a new position. Shaevel declined to comment.

The automotive division is the company's only other operation locally, and spokeswoman Beth Sandvig admitted that "we're not going to be able to assume all 130 people" into that business. Amherst is the only location for RSA Mortgage.

Puzniak said officials also have to finalize details with some customers and transition them off RSA's computer systems.

The company will look for another tenant for its office space in Amherst, or may seek "down the pike" to "bring staff from other businesses."

"We enjoy being in the Buffalo labor market," Puzniak said. "Those are decisions that haven't been made yet."

Local economic development officials said they expected the decision after talking with Fiserv, but also noted that there are several companies looking for available space now.

"It's churn in the industry. We're disappointed that this happened, but that's what we're here for, to try to make sure we get these jobs back and more," said Thomas Kucharski, president of the Buffalo Niagara Enterprise. "We're going to work hard to remarket the space."