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Going Out of Business......Everyday....

MORTGAGE INDUSTRY TID-BITS FOR 2006 - 2007

I got this information from a representative from one of our investors and found it very interesting. I figured I'd pass it on. Take heed folks, we are in line for a very, very, interesting year to come.

Time to Separate The Men From The Boys.

Many of you understand by now - this ain't your father's mortgage business any longer!! And if you have not been able to realize the incredible shift in this market, then you probably never will. In case you have been asleep at the wheel... here are some news tid-bits

E-loan announced it will close their subprime wholesale division

ResMAE listed for sale

Wachovia Corp.'s consolidation of its wholesale operations will result in layoffs

Fieldstone announced that it's closing 5 west coast branches including its Arizona operations.

Mortgage Lender Network (MLN) "stopped funding residential loans"

on 12/29 (they didn't actually say they were closing).

HMIC closed its doors on Dec 20.

As part of a $100 million cost reduction strategy, Sovereign Bancorp exited the wholesale mortgage market.

Own it Mortgage - closed its doors

Sebring Mortgage closed its doors

Axis Mortgage closed its doors

Oak Street Mortgage closed its doors

Right Away Mortgage closed its doors

Secured Funding closed its doors

Loans 123 - Not taking any more business

Aegis Funding (sub-prime) closed its doors (Aegis Wholesale (Conforming and Alt-A) and Home Equity are still open)

Option One - Up for Sale

Meritage Sold to Lime Financial

Mandalay - Closed its doors

Southstar - AE's leaving (a good source stating company cannot meet payroll obligations)

Accredited - OC Regional office production at its lowest levels, rumors they may close by 1st qtr.

Washington Mutual - Multiple Layoffs

Saxon - Layoffs

RFC - Layoffs

Decision One closed 6 regional centers.

Argent consolidated and let 1,000 people go.Currently for Sale

Ameriquest laid off 3,800 and shut 229 retail branches after announcing a $325 million settlement with state's attorneys general for overcharging borrowers.

Bank of American Mortgage laid off 225 locally.

Fieldstone Mortgage closed their Las Vegas branch.

Acoustic Home Loans closed its doors due to a sudden increase in repurchases.

WAMU exited their correspondent business

Posted by Jason Sardi, Mortgage Banker on 02/07/2007 11:44 PM

Comments (49)

wholesale lenders, going out of business, changing market

Originally posted at: Real Estate Financing...: Going Out of Business......Everyday....

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49 Comments on Going Out of Business......Everyday....

FEB

2007

It looks like there is going to be a lot of unemployed Loan Officers.

we have too many people in our sandbox anyway.

this industry needs for a few weak players to get out

All I can say is WOW! Hopefully all the people who came to this business to make easy will now move on! Unfortunately, the industry did lose some good L/O's because of how fierce the competition has been the last few years.

Jeff - You are probably right. It is time they turn in their badges....

Tom - Couldn't agree more, this is not anything but a way to make a living, make some money, and help out people at the same time. It is a great profession for those that choose it and for those that choose it as a profession. It's about Passion.....kind of like life.

Cynthia - This ain't a get rich quick scheme, the infomertial is over. You are right. And I think the good ones will stick around, if for nothing else, they are passionate about their chosen profession.

So.....does anyone need a mortgage?!?!

Crazy stats!!! It is going to be interesting to say the least.

FEB

2007

And New Century just announced today that they have to restate earning due to loan loss provisions and that they have to tighten up guidelines so loan production will be down 20%. And HSBC announced that they have to use 1.76 BILLION more than they thought just 2 months ago as loan loss provision due to the rapid deterioation of the loan portfolio. Credit tightening is here, that is going to a be a huge factor in this coming season.

Jason,

This is quite an eye opener. Thanks for posting. Fasten your seatbelts...

Just like there are too many Realtors, there are too many lenders....

Sooner or later there is going to be a swing, the later has now become the sooner!

I knew that some went out of business or where having trouble, but I was not aware that there was this many. But I guess that is because I do not use half of the ones mentioned. Thanks for the update on who is no longer "in." It looks like the "cleansing" is happening... :)

While the men and the boys duke it out, I'll go talk to a woman about my loan. ;o)

Sad to think about all the people who have to go to the stress of finding a new job. We live in exciting times but there is often a price to pay.

Mario

Very true. An industry shakeup will hopefully weed out the folks who don't know much more than what a credit score is.

Can you say DETOX? We have been use to getting what we want in this business and now we will have to be a little stricter to stay in the game. Good blog.

Great post. The industry needed this "cleansing". The clowns will go home now.

I work for SouthStar Funding as an Account Executive. SouthStar Funding is not going anywhere and the statements posted regarding AE's not being paid is FALSE!! SouthStar is an awesome company to work for. Please ignore the rumors you hear and definitely see what SouthStar has to offer your customers. www.southstar.com

Have a great day! :)

http://www.brokeruniverse.com/grapevine/thread/?thread=347307

What do you guys think about Southstar?

I have an offer from them, Wilmington and a few others and I would like opinions of which company is the BEST one to go with.
by mortgageguyse January 15, 2007

mortgageguyse - Wilmington is part of AIG (American International Group ) so it has strong backing. Small chance of them going out of business. Heard mostly good things about them. Their standard is a 5-year Pre-pay on fixed rate loans. Competitive on 1-loan No M/I. I believe they pay on margin..not bp. ( that´s a good thing ). Southstar - I believe they are privately held and have laid off a lot of Ops people. May want to do some research as to their stability. They´ve been a pretty good company but watch out if they depend on warehouse lines to fund loans. Good luck.
by May the force be with you January 15, 2007

thanks, that´s pretty much what I´ve been hearing. Just hard to make up my mind, ya know? Southstar has some great products out there, more so than Wilmington but Wilmington definitely seems to be pretty sound
by mortgageguyse January 15, 2007

SouthStar is great to their AE´s. Their Ops totally supports them.

They had a 20% layoff (nationwide) in October, but have brought some of those employees back already. (they also gave them decent severence packages.)

SouthStar isn´t going anywhere. Their owners have integrity.

by AlwaysRight January 15, 2007

Who is southstar backed by?
by mortgageguyse January 15, 2007

The main thing that bothers me with Southstar is they are/used to be in pretty deep with RFC. The 2 other players that had the similar type agreement with RFC haven´t faired so well (MLN & Sebring). I would explore this situation.
by Grim Peeper January 15, 2007

As far as I know Southstar is a private company. I would ask them if there are any companies that have a partial ownership.
by Grim Peeper January 15, 2007

Always right - Integrity doesn´t have a whole lot to do with a company shutting down. I would guess you are referring to MLN with the integrity shot. Southstar fits the same model as other lenders who have shut down recently by depending on warehouse lines. I never said that Southstar is a bad company. In fact, I think they are a very good company. If it makes you feel better beating the dead horse.....then go ahead.
by May the force be with you January 15, 2007

by Guinder January 15, 2007

mortgageguyse-

SouthStar is a good company, the President is a trustworthy honest guy. I worked with them for almost 5 years but could not get what I was promised from a senior manager and I got pissed and left. All in all good company! Just my 2 cents worth... They do take care of their employees.

Best Regards and Good Luck!

by subprimedowner January 15, 2007

mortgageguyse,

Just to clarify

Like a lot of lenders we did lay off some people but it accounted for less than 10%, not the 20 someone suggested.

We are not in deep w/ RFC. We deal w/ Prime, Alt-A, and subprime so we have mutliple conduits.

We are privately held and are a financially sound company w/ plenty of room on the warehouse lines.

good luck
by Guinder January 15, 2007

unprofessional and rude underwriters. the AE´s work really hard for you, but it does not matter when the UW won´t approve the loan. Why bother with the hassle? I would rather use Citi than Southstar.
honestly, they have had horrible customer service since the layoffs, beware...the company is going to go out of business.
by mortgageknows28 January 22, 2007

I can assure you that SouthStar is not going anywhere and I personally can tell you that we did hire back most of the people that were let go to fill other positions (because we do care). We are going strong and hitting hard for 2007. Pretty much one of the few sub prime lenders to make a profit the last few months.

From a very happy AE with SouthStar Funding
by stizums January 24, 2007

I am as well looking to make a move from where I am and am looking at Southstar, for one, they are one of the only banks left that offer a good amount of sub-prime, but also, I like that they are privately owned, (small-town family felling), I think they have a bright future. Are there any brokers who deal with them now? What do you think?
by pookie123 February 1, 2007

Its just part of the business. Its like a revolving door. Alot of these companies will be back of course with a different name.

Eddy

As someone who made a move from a big company (rhymes with Citi...oops) I can tell you that SouthStar is the place to be. I have never worked for anyone before that goes out of their way to please their employees. I can assure you that SSF wil be a player in the market for many many years to come. To the person who printing these rumors....study the facts.

Just of note, the blog wasn't meant to put down, bash, or even create unsubstantiated rumors. It was more designed to bring to a better light the avalanche of changes in the lending industry and the entities involved or no longer involved as noted by one of my investors. If certain things on this blog about firms, any firms, are totally unsubstantiated, I do apologize. A lot of these things though are already public knowledge.

As far as players in the market, SSFAE may be absolutely right about SSF, FYI. SSF has some great products, as do a lot of the companies mentioned who are still in business and probably will be for years to come.

It's that time of year when companies drop like flies. It is starting to slow up and we will go through the same thing next year.

Rob-What the heck did you do in your comment?

Sarah--need a mortgage, call me. I'm only a guy by name ;-)

I don't think this fallout should be any surprise. Many of these companies helped do a lot of bad loans and are now reaping the rewards. I can't tell you how many reps used to tell me to just fudge the numbers we really don't care anyway. It's built into our profit structure. Well those same reps are now on the street.

Teaching loan officers to be dishonest is never never profitable in the long run.

About SouthStar, like all the rest of those lenders hanginging on by a string we'll what happens when the dust settles...

About SSF, All that glitter aint GOLD.

It's all smoking mirrors.

Lenders Direct Capital is now out of business

http://www.ldcc.com/

February 8, 2007

Lenders Direct Capital Corporation Announces Layoffs, Closure of Wholesale Lending Operations

Lake Forest, California based nonprime mortgage company Lenders Direct Capital announces the closure of wholesale lending operations.

CEO Michael McQuiggan cited the lack of investor demand for their loan products and the current state of the US nonprime lending industry as factors in reaching the decision to cease wholesale originations effective immediately.

Everyone and their Mother, Cousin, and Grandfather were getting into the Mortgage/lending Industry. When lenders go out of business and close their doors, it will only be time when the "part timers", or the Pizza boy turned mortgage professional will exit the revolving door as well. It's sad, but there are way too many players on the court and its time for the vets to show their true colors!

Great post!!! I have been through this before and have been patiently waiting for this day to come again. I have an office that is very lean and very efficient, unlike those big shots who turned their nose to all of us and drove the large cars and had the huge cushy corner offices during the fat times. I can write a check for my rent without blinking an eye. I believe that if you run a good shop, all the talent that is shaking loose will find you. In my eyes, there are great times ahead!! Good bye pizza boys! You never really belonged anyway...........

On another note, Wilmington, in my eyes, should be as solid as rock. But in this wacky industry, who knows. What do you think the fallout will be when the inevitable happens and Bank of America purchases Countrywide? WOW!

Bank of America and Countrywide? haha that's a HUGE purchase

It was inevitable that with a market swing some small guys would fall off and the big ones would consolidate to weather the down times.

Greenpoint was packaging up last year. They weere getting really unreliable. Then they came back out and said "We merged with Capital One!"

So they want their AEs to get us to sell car loans and credit cards too! That'll be the day!

It is all a constant power struggle to be bigger and more able to make more money.

As far as LOs and AEs... the good will survive... the processors will always find work.. the bad will get jobs as bank branch managers.

Correction to list above. Oak Street did not close its doors. Oak Street was bought by NovaStar Financial and still going strong.

FEB

2007

with lending becoming so competative...I was told that it will go towards a flat fee basis next, similiar to the cut rate realtors such as help u sell and assist 2 sell.

I have saw HUD statements on transactions in which 'cut rate realtors' were involved. In my experience, that flat rate wasn't a flat rate at all and was no more inexpensive than going with a traditional realtor. In fact, just yesterday a co-worker commented after reviewing a HUD that one of the so called 'cut rate realtors' charges on there didn't even come close to a flat fee basis. But, that is another controversial blog in of itself.

Ann - just copied a recent blog from Brokeruniverse.com to toss out what some others are saying in the Mortgage Broker world about Southstar. Seems there was some question in here about their status. My post only added to the 'questons' about Southstar.

No big deal.

You ever check out Broker Universe? Thoughts?

I have checked out Broker Universe, mixed thoughts myself.

Yes David - The talk on the street is B of A will purchase Countrywide as soon as they get their deposits in line.

and Mule Nuts - word on the street is Novastar is one of those lenders that will be consolidating soon as well ... not sure they are going so strong

-------------- just what i am hearing -------------------- LP

Cut Rate...

I've seen high rate real estate firms now charging fees ON TOP of their full 6/7%!!!!

It's nice to see everyone has taken the list with a grain of salt.

This is just 'word on the street' as you can see with a snippit of the Broker Universe blog.....but does tell a 'story'. The old "Where there's smoke....there's USUALLY a fire"

FEB

2007

Last i heard bank of america pulled out of talks with countrywide. But who knows in business anything can happen.

Eddy

FEB

2007

Just to let all of you broker people know. The B of A countrywide deal is completely dead. Verified

FEB

2007

This came from another contact via activerain....

I really like your blog, you might want to update that
Silverstate Mortgage with 170 retail Lo's in Las vegas and branches all over the NW region closed their doors yesterday.
It is an interesting year.

Renee Jones
Production Manager
Direct Access Lending

MAR

2007

Does anybody know anything about Gateway capital mortgage?

APR

2007

Geeze Jason - how dare you pass on info about a sound company like Southstar....how dare you !

==============================================================

Southstar - AE's leaving (a good source stating company cannot meet payroll obligations)

APR

2007

As the Origination News reports, it looks like Southstar has closed down. I'm a Mortgage Recruiter and I'd be glad to talk with any of you folks who may have been working for Southstar or looking for a new opportunity (I still have quite a few Alt-A opportunities I represent).

Feel free to email me at pganem@clcareers.com or call at 865-455-0840

Good luck to all!

Paul J. Ganem

Apply online at: http://www.clcareers.com/

"Successful Relationships Start with a Clear Line of Communication"

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Attention Candidates: This e-mail is not intended nor should be construed as an offer of employment or future employment. Clear Line is not authorized to make such offers on behalf of its clients.

MAY

2007

Hey Paul, I'm a Mortgage Originator. Nice to meet Mr. Mortgage Recruiter. I burn no bridges in biz and I never worked for Southstar. Keep in touch.

Rob, I am ridiculous and you know that. It's all about painting the bread with the peanut butter. (I'm not entirely sure what that means but somebody said it today and I thought it sounded decent enough.)

JUL

2007

I'm glad to see that the real loan officers can still make it in this tough business right now. I'm just happy to see alot of the garbage go out. Good Post

Ben

JAN

2008

Hey Jason, look what I found....10 months later.. what do you think now??

APR

2008

This is a funny post, thought I'd bump it up to the top. I love the part where the Southstar AE's arguing that their company was so "sound and secure". I wonder how many LO's are no longer feeling the "fight", since this business officially sucks now. I left after 8 years. Sure, I was still getting loans, but I got sick of the deals dying at the closing table. All of that work to not close anyway. Even had a couple of loans close that didn't FUND because the lenders came in at the last minute and couldn't sell the deal on the secondary market. This business used to be fun, but more work for less pay...no thanks. I'd rather work hard and make a lot of money, not struggle to make a check every other month. Deals take too long now, guideline changes by the minute. Good luck to those of you that can stick it out, but when I became a BROKEr this wasn't what I had in mind.

Ben - You and me both man....

Mike - I think I'm still here:-)

Burned Out Broker - Yeah, I got some flack for this one:-) I think once the smoke clears, those still standing....will reap the rewards. Good luck in your future ventures!

hey guys - i am still around.... been away from Active Rain but still hanging in actually have been busy growing my company until this month as of now - back to last man standing mode~~~~~~~~~~~~

god bless us all....

Exactly Lewis, good to see your still around!

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