Carteret Mortgage Latest To Close; Accredited Exits Wholesale
The stream of mortgage companies exiting the business has slowed in 2008 compared to last year, but hasn't completely stopped: the latest casualty is Centreville, Virginia-based Carteret Mortgage, which told its employees today that it would wind down operations. A published report by Bloomberg News said the company will close its doors in the next 30 days. "We ran out of money," Weinstein told Bloomberg in an interview. "We're not technically out of business yet, but we're winding it down and trying to do the best we can for everybody." The company employs more than 800 nationwide, including 40 at its corporate headquarters, and originated more than $4 billion in 2006. Weinstein chose to retain employees this year out of the hope that the industry might turn around; it's hasn't. "You can't take a $3.5 trillion industry, turn it into a $1.8 billion industry and maintain your staff,'' former Carteret broker Paul Skeens told Bloomberg. "Eric knew last year that it was going to get tough and he tried to cut back, but no one knew how bad it was going to get." (Here at HW, we're getting pretty tired of originators trotting out the 'who knew?' line; plenty of people saw this coming, and most were in servicing operations or risk management departments that nobody on the production side cared to listen to back in 2006.) According to a company email posted at the Mortgage Lender Implode-o-Meter website, which tracks lender failures, Weinstein told employees "you should definitely seek other employment immediately. Take whatever files you can." Weinstein himself told employees that he has decided to exit the mortgage industry and do something else. "Don't call me with job offers," he wrote in the email. "I don't know what I will do next, but whatever I get into, I promise you it will be just as successful." Let's just hope it has a better ending. Accredited, too? We've received a few emails from readers also tipping us earlier this week that San Diego-based Accredited Home Lenders had decided to exit wholesale mortgage operations, but company officials had not yet confirmed the tips by the time this story was published. An internal company memo said the company "will be ceasing the acceptance of new locks on all wholesale current product line until further notice," but would continue to fund loans via its retail channel as well as service mortgages. A copy of the internal memo was posted to the Mortgage Lender Implode-o-Meter website earlier this week. It's unclear what the move by Accredited means; the company is owned by an affiliate of private equity investor Lone Star Funds. On May 30, HW broke the story that Lone Star had also acquired Bear Stearns' residential origination platform in the wake of the company's bailout by the Fed and JP Morgan Chase & Co. (JPM); by early June, former Bear Res CEO Jeff Walton took the helm at Accredited. Lone Star has not commented on its plans for integrating across both platforms, but the exit of Accredited suggests that the company's plans to form a separate originating entity in the wake of the Bear Res acquisition are moving forward. The company memo from late May suggested that Lone Star was looking to form LSF5 Mortgage Operations, LLC, based in the Dallas-Fort Worth metroplex; unconfirmed rumors have suggested the entity may be called Caliber Mortgage. Disclosure: The author held no positions in JPM when this story was published; indirect holdings may exist via mutual fund investments, as well. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.