Aug. 28 (Bloomberg) -- IndyMac Bancorp Inc., the second- biggest U.S. independent home lender, is hiring as many as 850 former employees of bankrupt American Home Mortgage Investment Corp. in a push to loan more through storefront offices.

It hired 600 workers who are expected to generate about $1 billion of new loans per quarter in 20 states, and is in discussions with up to a further 250, the Pasadena, California- based company said today in a statement. In contrast, Richmond, Virgina-based title insurer LandAmerica Financial Group Inc. said it was cutting 1,100 jobs on the expectation of falling mortgage originations.

IndyMac said it will also assume the leases on more than 90 offices where the employees worked. Last month, the lender eliminated 400 back-office processing jobs, about 4 percent of the workforce. In a July 19 posting on the company's Web site, Chief Executive Officer Michael Perry wrote that ``the mortgage market continues to be very tough.''

In today's statement, Perry said the company will have about $4 billion of cash and available credit at the end of September and that it has ``limited exposure to the current market-related liquidity issues that many other mortgage lenders are experiencing.''

Grove Nichols, a company spokesman, didn't return a call seeking comment.

Taking Advantage

This year's surge in missed U.S. loan payments slashed the profitability of home lending, forcing more than 100 mortgage companies to close, declare bankruptcy or put themselves up for sale.

LandAmerica, the third-largest title insurer by sales in the fourth quarter of 2006, has already made 300 of the 1,100 job cuts announced today, spokesman Peter Habenicht said. Separately, it cut 700 jobs in the first half of the year, he said. He didn't give an estimate of severance costs, which will be incurred in the third and fourth quarters.

IndyMac joins rivals Countrywide Financial Corp. and Merrill Lynch & Co.'s First Franklin unit in trying to benefit from the shakeout by hiring displaced workers.

``It's a way to try to take advantage of the turmoil,'' said Gary Gordon, an analyst at Portales Partners in New York who rates IndyMac's shares ``hold.'' ``A year ago, they would have had to go out and independently solicit these people one by one. Here's a way to hire on a large-scale, where it can be a lot more efficient.''

The new hires include Ron Bergum and John Johnston, who had been co-CEOs for retail lending in American Home's Western region.

Loan Origination

Most of the new employees specialize in ``prime conforming'' loans, or those that adhere to the conservative underwriting standards of the government-sponsored agencies Fannie Mae and Freddie Mac, the company said.

IndyMac announced early this month that most new loans would conform to the standards, because the market for non- conforming loans had come to a near-standstill.

Retail lending can be more profitable than issuing loans through independent mortgage brokers, who must be paid commissions, or buying them from smaller lenders at a markup, Gordon said.

``If you have the relationship with the customer you tend to earn more money on originating the loan, as opposed to just buying it from a broker,'' Gordon said. ``It's not zero risk, because if the market stays weak for an extended period of time, that overhead does become a burden.''

More Purchases

In the second quarter, IndyMac completed its purchase of the retail lending division of New York Mortgage Co., which had about 440 full-time employees in 10 states in the northeastern U.S. IndyMac said today it's also buying certain assets of Barrington Capital in Newport Beach, California, which will add 90 more retail loan officers in six branches in California and Nevada.

IndyMac said its retail-lending division will now have 1,466 employees in more than 134 branches, compared with 126 employees in nine branches before the acquisitions.

IndyMac shares fell 76 cents, or 3.2 percent, to $22.89 in New York Stock Exchange composite trading. They're down by half this year. LandAmerica fell $1.91, or 3.5 percent, to $51.91 on the same exchange. They are down 18 percent this year.

To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net.

Last Updated: August 28, 2007 19:07 EDT