MILA goes under

As of 4/20/2007 rumor has it that Mortgage Investment Lending Associates (MILA) is going under. At 4:30 CST the web site was down with the home page listing a thank you page to all the brokers that conducted business with MILA over the years. It read
"MILA would like to thank all of the mortgage brokers we've done business with over the years. Due to current market conditions, we do not have the resources available to continue lending. It is with great regret that we announce we are ceasing operations effective April 20th, 2007."
As of 9:00pm CST the website homepage is back on but you can't access the back office.

H&R Mortgage Corp. Adds Lay-Offs

An Option One Mortgage Corp. subsidiary is closing its doors. AcuLink Mortgage Solutions LLC has filed a Worker Adjustment and Retraining Notification Notice with Florida indicating it will lay off 67 people on June 12, 2007. According to an announcement, the company was originally launched in 2005 with the help of ValuAmerica to provide settlement services to H&R Block Mortgage Corp. and initially included a staff of approximately 30 people. H&R Block Mortgage Corp. announced earlier this month that they had laid off 141 employees in Tampa due to a move to H&R Block Bank.

ResCap to cut 1,000 more jobs

Residential Capital will eliminate more than 1,000 jobs as the company tries to regain its footing amid a severe slump in the subprime mortgage market.
The Bloomington-based mortgage lender, one of the country's largest, said Wednesday that about 86 positions in the Twin Cities will be affected. The company, which is jointly owned by General Motors Corp. and Cerberus Capital Management, employs 1,900 people in Minnesota.
The cuts come on top of a 1,000-job reduction the company announced this year, which included 47 local positions. Together, the two rounds of job cuts represent about 15 percent of Residential Capital's 13,000-strong workforce.
Most of the layoffs will be in the company's U.S. home mortgage operations and corporate services, which includes finance, human resources, legal and marketing, according to company spokesman Brett Weinberg.
"Because the U.S. mortgage market continues to underperform, we regret to have to announce additional layoffs," Chief Operating Officer Jim Jones wrote in a memo to employees. "The reductions are an unfortunate necessary step in the plan to return [Residential Capital] to health and profitability, and to position us to effectively capitalize on the opportunities ahead."
About a third of the 1,000 positions are already vacant, leaving 600-plus people who will actually lose their jobs.
The layoffs come one day after the company said that Chief Executive Bruce Paradis will retire in June. Over the past month and a half, most of the company's senior management team has left, including its chief operating officer, chief financial officer and treasurer.
Jones, who joined Residential Capital, or ResCap, in March, will replace Paradis.
Rising subprime mortgage defaults have taken a toll on lenders across the country, but ResCap has proved particularly vulnerable. The company offered some of the riskiest mortgage products, including interest-only mortgages, and subprime loans that required little or no income documentation.
Last month, the company said it lost $651 million in the fourth quarter, compared with a profit of $118 million during the same period a year ago.
In 2006, ResCap earned $182 million, compared with a profit of $1 billion the previous year.
"ResCap did not move quickly enough to reduce exposure in the face of this downturn," Paradis recently told investors.
ResCap has said that it will cut costs, tighten underwriting standards, and accelerate "lost mitigation efforts" to help borrowers pay their bills and avoid foreclosure.
The company will also receive $1 billion in new capital from GM.
But company executives and analysts warn that the subprime market will deteriorate further this year.
Interest rates on more than 10,000 of the company's subprime adjustable-rate mortgages will reset by the end of the year, with many borrowers seeing their monthly payments jump by more than 30 percent, which likely will lead to more defaults.
Jones' memo said he is confident ResCap will recover.
"The next few months will determine how well ResCap will emerge from this market disruption and how fast we can begin to capitalize on the opportunities ahead," Jones said. "We are already seeing signs that the strong will grow stronger. We will be in their company."

Three Wholesale Lenders Shut The Door on Business

Both First Horizon Home Loans and First Source Funding Group Inc. have shut down their nonprime wholesale lending channels as Homefield Financial announced the closing of its Alt-A wholesale lending division.Irving, Texas-based First Horizon will no longer be accepting applications from mortgage brokers for nonprime loans.The decision to exit the nonprime business comes as many wholesale lenders have seen profit margins evaporate, coupled with dwindling bids from Wall Street firms distancing themselves from such loan pools.About 60 positions will be eliminated as a result of the strategy, which will not affect their conforming and home equity lending to brokers.Irvine, California-based First Source announced that it has ended mortgage banking operations, effective immediately.The company said it hopes to accommodate existing transactions by making “every effort” to fund locked loans with loan documents that were drawn and released by March 8, 2007.On March 9, First Source announced that it stopped accepting new loan applications, as well as requests for rate locks or loan documents.Also based in Irvine, Homefield Financial has announced that it is shutting down its Alt-A wholesale lending division."It is with great regret that Homefield announces that the Homefield wholesale division will no longer be accepting broker applications for consideration of a broker/lender relationship," said Homefield on its website.Homefield was established in 1998 and went on to make the Inc. 500 for both 2004 and 2005.Last August, the company reported $2.5 billion in annual originations and announced an expansion into Las Colinas, Texas to create 200 new positions.

WareHouse USA Takes an Exit

The warehouse lending subsidiary of NovaStar Financial Inc. is getting out of the mortgage industry. According to a statement posted on their website, Warehouse USA Capital Corp. has stopped taking new applications for their mortgage warehouse lines-of-credit. Existing clients are being notified and their loans will now be closed according to their agreements with the Roswell, Ga., company. The lender which was reportedly founded in 2003 as NovaStar Capital Inc., financed up to 100 percent of Alt-A and nonprime mortgages. Its programs included USA Direct, USA Express and USA Pro. The statement released by the ender stated," All new funding activity by Warehouse USA under existing warehouse lending lines is expected to be concluded on or about April 27,2007. The closure of the warehouse lending business will not impact direct mortgage loan funding by, or any other business of, any NovaStar entity."

Fieldstone Cuts 14% of Workforce

Columbia, Md. based company, Fieldstone announced it is consolidating operations and trimming staff. Six wholesale operations offices will be shut down immediately, however, the Account executives will remain in the areas where the offices are being closed. Nine additional branches will be closed, while home office staff reductions are being evaluated. According to the company's statement, currently 125 people are affected by the layoffs. They expect all consolidation to be complete by the second quarter. Credit-Based Asset Servicing and Securitization LLC - or C-BASS, which has agreed to acquire Fieldstone, lowered its acquisition price from $5.35 per share to $4 per share. Their reasons for lowering the price per share were additional liquidity problems. Fieldstone also announced in February it paid $10.6 million to settle shareholders litigation. The real estate investment trust said it expects to take a $550,000 pre-tax charge in the first quarter as a result of the consolidations.

SouthStar Funding Ceases Operations

Two years ago SouthStar Funding introduced a very aggressive loan program called the Simple Score specifically for borrowers with credit scores of 540 or higher, on all property types up to $1 million and for up to 100 percent loan-to-value. This program helped the company become one of the fastest growing privately held companies in the country. Today the company succumb to pressures of a changing mortgage industry and had the following statement posted on their website, "SouthStar Funding, LLC sincerely regrets that it was necessary to cease its mortgage lending operations. The recent unprecedented downturn and policy changes in the mortgage industry necessitated this action. SouthStar appreciates its employees' and customers' loyalty to the company throughout the years". The Atlanta-based wholesale lender was founded in 1998 with 25 employees by partners Kirk Smith, Brian Smith, Mike Fierman and Tyler Wood. The company reported a production of $4 billion in 2004. In 2005, the lender made the 24th annual Inc. 500 ranking with 329% year-over-year sales growth from 2001 to 2004. However, things started to go downhill for the lender last year. SouthStar became involved in a discrimination suit with the National Community Reinvestment Coalition (NCRC) in March 2006 after they filed a complaint with HUD. The NCRC claimed Southstar Funding had discriminatory lending practices towards African American and Hispanic borrowers because they refused to approve loans on any row houses valued less than $100,000 and on any row houses in Baltimore. (See LenderLoft September 2006 archives to read more about the story).