Non-QM lender Athas Capital Group ‘bows out like gentlemen’

Company is shutting down, laying off more than 200 employees

It’s yet another casualty in the non-QM space – California-based Athas Capital Group is winding down its operations and laying off more than 200 employees due to the challenges in the secondary market. 

Executives at the mortgage lender announced their decision in a letter sent on Wednesday to business partners and employees, which was reviewed by HousingWire. According to the document, Athas is winding down, effective immediately, but will honor loans in its pipeline that it’s legally obligated to fund.  

Industry veterans Alim Kassam, Brian O’Shaughnessy and Kevin O’Shaughnessy founded Athas Capital Group and its in-house financing arm Rama Capital when the financial crisis hit the country in 2008. 

Athas Capital has been credited for “pioneering the re-birth of ‘sane’ subprime lending,” according to the company website. Since 2008, it has funded over 14,000 loans, reaching $5.5 billion in volume and becoming a top 10 non-QM originator. 

But in the current mortgage landscape, with crazy rate spreads and shy investors, non-QM can be a dangerous space. With surging rates, lenders are struggling to sell in the secondary market legacy lower-rate loans originated months ago as investors seek higher yields. 

This liquidity problem caused the implosion of non-QM lenders First Guaranty Mortgage Corp. and Sprout Mortgage. Others are backing off the product, such as Impac Mortgage Holdings

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Trouble ahead, trouble behind

Athas executives believe the challenges will continue for the foreseeable future.

“Our outlook for the secondary market for non-prime mortgages is that volatility will continue, liquidity will become increasingly scarce – or worse yet – unavailable for a period of time, and that loan sale premiums will be below most companies’ cost to produce,” Kassam, the co-CEO, wrote in the letter. 

Brian O’Shaughnessy, co-CEO, told HousingWire that the company has been profitable year-to-date but could not break even with the dislocated secondary market. Athas produced around $100 million a month in mortgage loans but was taking millions in losses to sell the loans to investors. 

“If you’re making $100 million a month, and it costs you three points to produce, and you need to sell it at a 98, that’s a five point loss on $100 million production a month, or $5 million,” he explained. “We came to a very hard decision that we didn’t want to set our net worth on fire and then find out later we’d have to go bankrupt.”

He added: “We are choosing to exit the marketplace now before things deteriorate even further. This way, we can unwind our business in an orderly fashion, make sure all of our warehouse lenders get paid in full and do right by our employees.” 

Since its creation, Athas has raised $475 million of revolving lines of credit from 13 different banks, according to the company, with “none of its lenders even incurring any losses, even during the 2020 COVID economic shutdowns.” 


According to O’Shaughnessy, Athas has around 260 employees, and all of them were laid off last week, with their full salary and severance payment. 

HousingWire found WARN Notice filed with the Employment Development Department in California, which shows the company is laying off 29 employees in Irvine, 23 in Los Angeles and 159 in Calabasas. 

Most employees laid off were wholesale account executives, remote underwriters, and account managers. Athas executives said the company will help them to find jobs at other non-prime lenders. 

“Athas decided to ‘bow out’ like gentlemen and not go out like some of our other competitors. We are choosing to close our business; we are not going out of business. We will be focused on managing our fund [Rama Capital],” O’Shaughnessy wrote in a LinkedIn post.

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