Another stunning mortgage lender failure came down the pike today, with HomeBanc filing for bankruptcy less than a week after it said it could no longer fund loans. From the Associated Press:
Just days after it sold five retail branches to Countrywide Financial Corp., Southeast regional mortgage lender HomeBanc Mortgage Corp. filed for bankruptcy protection in U.S. Bankruptcy Court in Delaware ... Some of the largest investment banks are listed among the creditors in the bankruptcy filing, including JPMorgan Chase & Co., Bear Stearns Cos. and Deutsche Bank. Also listed among the top creditors is French bank BNP Paribas, which earlier this week froze three investment funds heavily invested in securities backed by subprime mortgages.
HomeBanc had stopped originating loans Monday, citing "extraordinary difficulties," saying it could no longer fund loan purchases; at the time, the company also said it would exit the origination business in order to focus on servicing and loan portfolio management activities. The company disclosed Tuesday that it would sell its retail origination business to Countrywide. HomeBanc posted a net loss of $22.6 million during the first quarter, with total loan originations dropping 13 percent. The company employs 1,100 employees in the Southeast. No word has emerged yet as to whether the company will seek any debtor-in-possession financing.