SouthStar Funding Ceases Operations

Two years ago SouthStar Funding introduced a very aggressive loan program called the Simple Score specifically for borrowers with credit scores of 540 or higher, on all property types up to $1 million and for up to 100 percent loan-to-value. This program helped the company become one of the fastest growing privately held companies in the country. Today the company succumb to pressures of a changing mortgage industry and had the following statement posted on their website, "SouthStar Funding, LLC sincerely regrets that it was necessary to cease its mortgage lending operations. The recent unprecedented downturn and policy changes in the mortgage industry necessitated this action. SouthStar appreciates its employees' and customers' loyalty to the company throughout the years". The Atlanta-based wholesale lender was founded in 1998 with 25 employees by partners Kirk Smith, Brian Smith, Mike Fierman and Tyler Wood. The company reported a production of $4 billion in 2004. In 2005, the lender made the 24th annual Inc. 500 ranking with 329% year-over-year sales growth from 2001 to 2004. However, things started to go downhill for the lender last year. SouthStar became involved in a discrimination suit with the National Community Reinvestment Coalition (NCRC) in March 2006 after they filed a complaint with HUD. The NCRC claimed Southstar Funding had discriminatory lending practices towards African American and Hispanic borrowers because they refused to approve loans on any row houses valued less than $100,000 and on any row houses in Baltimore. (See LenderLoft September 2006 archives to read more about the story).