50+ Wholesale Lenders Now Belly-up or Floundering - updated - list keeps on growing

By
Mortgage and Lending with 5 Star Mortgage, Llc

Dead fishRealtors: be aware than pre-approval letters you may have received previously from mortgage brokers may not be worth the paper they're written on, as the wholesale lender who may have approved the scenario is likely no longer in business or tightening its guidelines. Prepare your buyers to have to come up with higher down payments, especially if their credit is shaky. The conventional wisdom is that the freefall we saw in wholesale mortgage stocks last week was isolated to subprime and would likely not reverberate throughout the capital markets. I think that assessment is wrong and this meltdown will have serious repercussions in our industry. There are now over 50 lenders in serious trouble or out of business, and nearly all the remaining lenders are or will be tightening their credit guidelines, making it much harder for consumers, even ones with good credit to purchase or refinance homes. 

Accredited Home. Panic selling; analysts are fearful about liquidity and have downgraded rating from "hold" to "sell"; $100 million drop in annual net income expected; missed earnings filing deadline with the SEC.

Acoustic Home Loans. A harbinger of the broader meltdown, Acoustic Home Loans ceased accepting new loan submissions last year; buybacks were a major factor in collapse, according to BusinessWeek.

Aegis Funding. Subprime unit has closed and a consolidated operation is reportedly handling prime, slimmed down subprime and expanded Alt-A offerings.

Alliance Home Funding. Closed. Parent has folded mortgage brokerage into bank and "taken pre-tax charge of $680000 and an after-tax charge of $449000 to wind down the Alliance Home Funding operation," according to fourth-quarter earning statement.

Ameriquest. Parent ACC Holdings had to beg Mass. Gov. Deval Patrick, former director, to help get them a life-sustaining line of credit from Citigroup to avoid shutting down. They've shut most of their offices, laid off 3,800 people, and have settled with 30 state attorney generals for $325 million over predatory lending practices.

Ameritrust Mortgage Company.  Shutdown, according to email to brokers: "Effective Monday, March 05, 2007 the subprime wholesale division of Ameritrust Mortgage Company is no longer in operation. Due to market conditions, our warehouse provider, Washington Mutual, ceased funding for subprime loans."

Argent. Owned by ACC Holdings but may be acquired by Citigroup as part of a deal for working capital and a credit line for ACC if it falters.

Axis Mortgage & Investments. Parent Biltmore Bank of Arizona closed this wholesale subsidiary in November  2006 due to "current lending environment and current conditions of the real estate market."

Bay Capital/Clear Choice Financial. Press release on January 12, 2007: "Clear Choice has...announced that it is insolvent and in default on numerous obligations…. officially closed the mortgage lending offices of its wholly owned subsidiary, Bay Capital"

Central Pacific Mortgage. Shuttered its door because it was apparently unable to make February's last payroll, mostly due to rising buyback costs.

Coast Financial Holdings. Distressed because of developers unable to complete construction has put $110 million in loans in jeopardy for loans for 480+ homeowners.

Coastal Capital. Shut down; owner & president indicted in Duke Cunningham scandal.

Concorde Acceptance. Closed as of January 31st, 2007.

Countrywide. Stock in a freefall after announcing that close to 20% of its subprime loans are in default. $600 million worth of stock sold by insiders. Reportedly in talks over a merger or alliance with Bank of America.

DeepGreen Financial. Closed as of January 31, 2007 by parent Lightyear Financial, a private equity firm.

 DomesticBank. Stopped wholesale operations on 3-2-06, according to their website.

 Doral Financial Corp. Has agreed to pay a penalty to settle fraud charges with the U.S. Securities and Exchange Commission for a close to 1 billion overstatement in earnings. On March 2nd, 2007, said it will post losses for 2006 and warned on of a cash crunch if it is not able to refinance $625 million in debt.

Eagle First Mortgage. AZ regulators shut them down citing illegal lending practices. Has until 3-14-07 to wind up operations.

Encore Credit/ECC Capital. Was supposed to be sold to Bear Stearns for $26 million; ECC wound up paying Stearns $7 million to take it off their hands.

EquiBanc. Closed by parent Wachovia after "intensive strategic review."

Fieldstone. Closed 6 operation centers; had to restructure lines of credit; bought by C-Bass (MGIC & Radian Group) after losing more than 70 percent of it's value.

First Franklin. Acquired by Merrill Lynch from National City

Franklin Financial. Apparently has shutdown its wholesale operation as of 5pm 2-28-07; retail may be still alive

Fremont General. FIL (Fremont Investment and Loan, its subprime subsidiary) has been ordered to cease-and-desist by the FDIC

FundingAmerica. Closed as of January 19, 2007, little information available on their website.

 GMAC. Major layoffs in ResCap; looming writedowns for subprime loan portfolio; may take a large ($1 Billion) hit to cover bad loans made by ResCap.

Harbourton Mortgage Investment Corp. Closed as of December 20, 2006, according to company press release "HMIC was forced to take these actions when it was unable to satisfactorily resolve mortgage repurchase claims."

Home 123 Corp. A subsidiary of New Century; two dozen offices shuttered and 200 jobs cut as of January 17, 2007.

Ivanhoe Mortgage. Unable to fund operations due to a shortage of cash, according to CEO John Cassel

Lender's Direct Capital Corporation. Closed wholesale operations due to "lack of demand" effective 2-8-07.

 Mandalay Mortgage. Notified its brokers that it has exited the nonprime wholesale mortgage business. A message on its Web site said no new loans will be funded after Jan. 31, 2007.

Master Financial. From email to brokers: "Effective March 14th, [2007] Master Financial will cease its wholesale loan origination operation including accepting new applications for mortgage loans and funding loans in its pipeline."

Merit Financial. Shut down because of "rising interest rates". State regulators investigating.

Meritage Mortgage. Business shut down by parent NetBank. Staff acquired by LIME Financial.

Millenium Bankshares. Winding down all mortgage lending activity by the end of 2006 to "avoid the risks normally associated with mortgage banking activities," according to press release.

MLN (Mortgage Lenders Network). Has filed for Chapter 11, issued a cease and desist order Jan. 24 by Connecticut banking officials.

NetBank Inc. Laid off the remaining portion of its staff in December after shutting down its subprime subsidiary Meritage.

New Century. Stopped funding; criminal probe; in breach of debt covenants and trying desperatly to get waivers; restating '06 earnings downwards; 10 class-action shareholder lawsuits; may be in "death spiral", according to analysts.

Novastar. Seriously impaired; likely no dividends in 2007, no taxable income through 2011; many shareholder lawsuits.

Option One. Owner H&R Block has publicly announced it will be sold by end of March 2007.

Origen Wholesale Lending. This modular home lender is transferring its wholesale operations to its correspondent partners.

OwnIt. Ceased operations in December 5th 2006, Filed bankruptcy December 28th.

Popular Financial Holdings. Parent shutting it down and completely exiting wholesale subprime to "focus on profitable businesses".

Preferred Advantage. Closed completely when parent National City sold First Franklin.

ResMAE. Filed Chapter 11 bankruptcy; assets purchased by Citadel Investment Group; being hounded by Merril Lynch for more than $300 million in bad loans.

ResCap. Laying off about 1,000 people; may force former parent GM to take a $950 million hit due to "loan loss provisions", according to terms of its sale to Cerberus Capital, says Marketwatch.

Rose Mortgage. Posted on its website: "EFFECTIVE IMMEDIATELY ROSE MORTGAGE CORPORATION IS CLOSED."

Sebring Capital Partners. Shut its doors as of December 5th, 2006 due to rising defaults, according to company employee quoted by the Denver Post.

SecuredFunding. Ceased funding "based upon market conditions and limited product availability", according to website.

Silver State Mortgage. Per their website, shut down nationwide wholesale operations as of February 14, 2007.

Summit Mortgage. "Came to terms with a difficult business model in an unforgiving economy."

Trojan Lending. "Effective as of the opening of business on Monday March 5, 2007, Trojan Lending has ceased its wholesale mortgage operations and will no longer be underwriting or funding wholesale mortgages nationwide."

I think that we will see an even bigger spike in foreclosures as it becomes harder and harder to get customers approved, and customers who are locked into 2/28 and 3/27 subprime adjustable rate mortgages (the "Exploding ARM's) won't be able to refi as credit tightens and rates go up even higher. That loud hissing sound? That's the air coming out of the housing bubble. Let me know what your take is on the repercussions for our industry and the best steps to take going forward. A hat tip to The Mortgage Lender Implode-O-Meter Blog and the Bakersfield Bubble.

Comments (37)

Lewis Poretz
Apex Home Loans - Annapolis, MD
Business Development Manager

For anyone living in a bubble ---   check this site out  www.mortgageimplode.com   

 Just wait until the neg am loans start recasting -------   Ka - Bam!!!     Check out my post on this topic and please everyone chime in -   I think the Pay Option arms are going to deliver a blow much bigger than anything the subprime market has done so far.......

   http://activerain.com/blogsview/59649/Will-1-loans-will

 

Lewis Poretz      

Mar 18, 2007 06:05 AM
Lewis Poretz
Apex Home Loans - Annapolis, MD
Business Development Manager
Great post Jose -  My take is --- Forget the Subprime loans and the arms people are talking about ---the Pay Option Arms are going to be the nuclear disastor!   LP
Mar 20, 2007 02:07 PM
Anonymous
Kay Shuler
Does anybody know where I can get a list of subprime lenders that are still up and running?  Possibly someone who can still do 100% under a 620 score?  Or is this not an option?  Thanks so much!
Apr 04, 2007 06:00 AM
#22
Anonymous
IvanMonet

You can get 95 and 100% via Aurora as long as it is a fully amortized 15/30 year mortgage, etc...

But 620..... That is gonna make it tough....

Apr 08, 2007 03:02 AM
#23
Jeff Kitchen
Harrison Township, MI

Implode-O-Meter is great!!

Latest count of major US mortgage lenders that have croaked since late 2006:

51

http://ml-implode.com/

Apr 09, 2007 10:38 AM
Anonymous
Anonymous

I just have to respond to this post.

Although I find blogs a lot of fun, sometimes that is all it is. FUN!  I work for Countrywide. Just a little info. First of all. B of A and Countrywide never had any discussions about any mergers or buying each other out. It was a rumor that ran wild for about one week.Then died a very quiet death. 

Second, 20% of sub-prime in default, stocks plunging. Look at the stock prices, they have been very stable, up and down a little, but stable.

Of all the mortgages that Countrywide has, only 9% are sub-prime. If the 20% of them are failing and never recover, that means 1.8% of the loans have failed. The problem is, 1.8% is not going to get as many comments because that is a boring small number. 

Just wanted to put in my two cents worth.

 

 

 

Apr 10, 2007 05:10 AM
#25
Bonnie Marie DeWolfe
Eagle Ridge Signatures Inc. - Pueblo West, CO
Great post!  Made for some very interesting reading.  I'm wondering what will happen to all the people that were told by the loan officer, at the table, not to worry about the ARM that would go into affect in 2 or 3 years, he would just refinance them and maybe at that point they would qualify for a 30 yr fixed, if not they'd just re do the same loan and wait 2 more years to see if their credit score was up to par yet.
Apr 16, 2007 01:37 PM
Anonymous
RAMON

What  happen to the private mortgage insurance  (PMI)  ? are this  suppose to cover the lost of the lenders?

please anyone have any information how this work? 

thank you,  for your information and thanks to Jose for his excellent blog.

Ramon

Aug 22, 2007 11:51 AM
#29
Jay Beckingham
Christensen Financial Mortgage - Port St Lucie, FL
Seniors ROCK!

the great pretenders. they could do business when the market was at its optimum.

 

Aug 22, 2007 12:44 PM
Rosemary Brooks
BMC Real Estate - 209-910-3706 - Stockton, CA
The Mother & Daughter Realty Team

THis is a great idea but please update the list.  Just go into edit and add on the others, there are several more just standing outside your door waiting to be added to that list.  Sorry to say.

Thanks for the post, good information. Bad news.  The meltdown is still melting.

Aug 24, 2007 07:52 AM
Esko Kiuru
Bethesda, MD

Jose,

That's an exhaustive list, sad but true. The mortgage industry is going through a thorough house cleaning that it really needs. When the business was booming a few years ago, everyone and his uncle got into it in hopes of making a killing. Well, those half-baked operators are now on that list and deserve to be. A new day is around the corner.

Aug 24, 2007 01:03 PM
Anonymous
Moni
I have Novastar as my lender and at first I thought they were so understanding, until I had a problem. I had never been late even after my mother died and months of unemployment, but this May I really hit hard times due to my own illness and me missing work. I advised them that I could not make one month and asked if they could make an arrangement with me to add that payment to the end of my contract and let me just pay my June on time and continue with the rest. They would not except that so my family came together and missed paying their own bills so that in June and at the end of July they could help me get in two payments of a mortgage and a half to catch up. Then finally I got caught up. Made my payment this month over the phone with a loan officer and he was authorized to take one payment using my credit card, but actually took two.  When I called back to get my money put back on my card I have been told so many stories that I don't know who to believe. One representative told me that they could not put it back on my card even though it was their error.  She said I shouldn't worry since it was so close to another payment being due, but I advised her that I could not afford for that payment to be on that months billing cycle. I called and spoke with another representative and she had me fax information to a supervisor and said that it would all be researched and be taken care of.  I've waited for weeks and still haven't received a response. Finally I had to contact my credit card company to dispute the charges for me, but I'm pretty sure the mortgage company may have a problem with that because now October payment will be due and I really don't want to make that September payment until I know that they are going to credit my card back, but my card services advised me to go ahead and make a payment, but for some reason when I tried online yesterday it said their credit card server was down. I have and adjustable rate now with them and my payments are steady going up. My credit is so bad that I can't refinance with them.  They are so rude now when I call them, I just don't know who to turn to. Yes I blame these sub-prime lenders, but my mortgage counselor who got me this loan and my real estate agent who found her is who I blame and they are living happily ever after while this financial bind is making my health bad.
Sep 25, 2007 03:24 AM
#34
Anonymous
Heike

I dealt with Ameriquest, who did a refy after I had 2 car accidents and lots of equity in my home. They  did not even look at my home, just checked the area I lived in and gave me a loan, since the value on my home was double than what I owed. Found out that Amerquest were sued in 2003 due to their illegal and ruthless practises with borrowers and found guilty but just got a slap on the wrist by just paying a fine. As part of the sentencing however, they were p to assist customers in trouble and I approached them and they played around with me making jumping through hoops for 6 month and than denying the loan.. Later I was sold to another Prime lender Litton, who really put the screws on me wanting douple payments, when you can barely afford one. When I finally had enough stress and abuse could not take it any more, because they wanted to close, I put my home on the market and I received 6 offers the very first day and sold it. They were informed of the sale and still charged $ 950.00 dollars foreclosure fee.I have no sympathy for those companies who made a fortune on the 'tears of others' and now it is payback to see how the other side feels. My home was sold in January 2005 and I made a tremendous profit that I invested and glad, That I sold before the bottom dropped out. My credit is ruined, but I have money in the bank and I learned a lot of valuable lessons.

 

Oct 08, 2007 08:41 AM
#35
Lewis Poretz
Apex Home Loans - Annapolis, MD
Business Development Manager

wow -  how cool is it to go back and read these comments that are months old......   some people got it and some were way off....   very cool reading

 

and then I found my comment - 

 

 

For anyone living in a bubble ---   check this site out  www.mortgageimplode.com   

 Just wait until the neg am loans start recasting -------   Ka - Bam!!!     Check out my post on this topic and please everyone chime in -   I think the Pay Option arms are going to deliver a blow much bigger than anything the subprime market has done so far.......

   http://activerain.com/blogsview/59649/Will-1-loans-will

 

Lewis Poretz      

03/18/2007 by Lewis Poretz Edit Delete
Oct 08, 2007 12:18 PM
Anonymous
mtg.banker

Does anyone know of a sub=prime lender that is still in business and hiriing ????   Live in the Chicago land area and looking for a job.

 

Thanks

Nov 06, 2007 10:22 PM
#37
Anonymous
bell

please refresh my memorie however, i do realize that referrel fees are against the law.

But tell me what if i were to get a translation fee for translating the loan through and a processing fee for acquiring forms?

Sep 26, 2008 01:53 PM
#38
Anonymous
lourduswami durairaj

you are all cutthroats and bastards deserved to be kicked again and again.

Oct 02, 2008 05:36 AM
#39
Anonymous
dcdubbs

Great Post- how long did that take. I had a mortgage that was with a bank that went belly up- found a site aaptly named Bankapedia.com with a list of operating and imploded lenders. Its a great resource if you want to find out who bought your imploded lenders paper- their wholesale lender list can be found here:

http://www.bankapedia.com/mortgage-encyclopedia/wholesale-banks

 

Apr 11, 2009 01:44 PM
#40
Anonymous
Mark O'Leary

For those clients of yours who have shaky credit, Trinity can seriously help get their FICO scores a needed lift in 30-45 days, with a money back guarantee.  We have helped thousands of people qualify for better loans by getting negatives removed from their credit reports, as dictated by the Fair Credit Reporting Act. 

I partner with brokers and real estate professionals to help get their clients to qualify quickly and affordably.  Don't lose the time you've already invested in these potential clients.  Close their business too!  I can help you close more business.

Call me to discuss how I can help you.  Mark O'Leary 314-298-1100  www.trinityenterprisesllc.com

Jun 02, 2009 04:03 AM
#41
Anonymous
Phil LaFontaine

In regard to Countrywide; lets not forget that they have Dodd and Frank on their side.As to the post about those nasty subprime lenders. Subprime had it pro's and con's. It all boiled down  to how you and the customer used them. You state that the lender, realestate agent and the mortgage broker are all evil. Unless your broker was a complete sleezeball, I will assume you had the opportunity to read the loan summary, the HUD 1, as well as the disclosures presented to you.And again I'm sure(I may be wrong) but I'm sure your broker discussed the mortgage with you as well as given you a pamphlet from RESPA explaining the adjustable loan you were getting. I have been in this business since 1983 and have seen companies and programs come and go.This to will pass.Americans as well as Govt. and business have short memories, and as things get rosey again, the new programs again will emerge and rear their ugly head. The key will be ;have we as brokers learned our lesson?

Jul 13, 2009 11:44 AM
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