Hudson City Bancorp Inc. is looking for opportunities to increase its residential mortgage originations operations to take advantage of the upcoming drop in the conforming loan limits, its top executive said. The company reported net income of $96 million for the second quarter, down from $143 million one year prior.

During the first quarter, Hudson City restructured its balance sheet, resulting in a $556 million net loss. Now that the restructuring is completed, Ronald E. Hermance Jr., chairman and chief executive, said the company is expanding its mortgage business by moving into northeast Massachusetts, where it will start originating loans in the third quarter.

"While low mortgage-related assets yields are restraining balance sheet growth, we believe that we need to be in a position to increase our loan production when such growth becomes more profitable for us," he said, adding the company sees an opportunity to grow market share in October when the conforming loan limit are decreased.

For the first six months of the year, Hudson City originated $2.7 billion and purchased an additional $291 million of residential mortgages, compared with $2.8 billion and $542 million respectively for the same period in 2010. The company said loan purchase activity was down because its normal sellers were either selling to the government-sponsored enterprises or keeping the loans in their own portfolio.

Hermance added a special master appointed by the New Jersey Supreme Court has notified Hudson City that it is meeting the foreclosure filing standards in the state.

The company has $914 million in non-performing loans, as the industry issues regarding the foreclosure process has stretched the timeline for resolution to 30 months to 36 months from the initial non-performing period.

Still during the quarter, Hudson City sold 45 properties. Of the 123 properties it has in its foreclosed properties portfolio, 54 were under contract to sell.

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