Investaid Corp. Takes an Exit

Ivestaid joined the several other subprime lenders to exit the market this week. The company ceased acceptance of applications on March 15 due to the instability in the subprime market; however, President Bob Rubin is hopeful and he believes that the exit is only temporary. In an email sent to its employees, Rubin wrote "the conditions in the market continue to collapse and the pressure placed upon our affiliated bank from regulatory agencies with regards to subprime is impossible to bear." He also noted that the temporary shut down of the company is due to the massive meltdown and perception of loans in the subprime sector. The temporary closure if the origination arm of the company, which funded $37 million per month and offered 100 percent financing to subprime borrowers, has resulted in approximately 40 layoffs of which half were in origination and the other half were in support staff. Twelve employees have been retained to service and sell loans. Investaid is currently licensed in the states of Indiana, Florida, Kentucky, Wisconsin, Missouri, Arizona, Colorado, Nevada and Utah. Rubin stated that these states are economically more stable and they are able to impose stricter prepay penalties. Before announcing the temporary closing, the lender has plans to branch out into Kansas. The company reportedly had a base of approximately 2,500 brokers, though number it did business with was smaller. Investaid focused mostly on combined loan-to-value loans and among its plans were to look for opportunities in the CLTV arena and in foreclosure bailouts which it offered at 65 percent LTV.