HMIC: Closure Due to Repurchase Obligations
Updating a story previously reported on HW, Harbourton Capital Group, Inc. issued a formal statement regarding the shutdown of its wholly-owned mortgage subsidiary, Harbourton Mortgage Investment Corporation (HMIC). As previously reported here, the subprime lender ceased operations effective December 20, 2006. HCG said that its HMIC business unit was forced to shut down when it was unable to satisfactorily resolve mortgage repurchase claims asserted by selected investors that had purchased mortgage loans from HMIC. Mortgage repurchase claims require a lending institution to buy back any loans it originated that fail to meet certain requirements set at sale. HCG said it will likely write off its full investment in HMIC, and that the mortgage operation's recent significant losses and requirements for new capital negatively impacted HCG during 2006. The company expressed hope that the cessation of its continuing losses from HMIC will enable HCG and its mezzanine lending subsidiary, Harbourton Financial Corporation (which is not impacted by HMIC's closure) to stabilize their financial operations in 2007. Harbourton is a holding company for two financial service businesses, mezzanine lending to developers and homebuilders, conducted by Harbourton Financial Corporation, and mortgage banking through HMIC. HFC's primary business is providing project financing to builders and developers of residential, for-sale projects.