Millennium Funding Group Folds

Just in......

Due to the current market conditions in our industry, Millennium Funding Group has elected to discontinue origination of residential mortgage loans. Effective immediately , we will no longer accept new mortgage loan applications, or issue approvals on new loans. However, in order to accomodate our borrowers, and our mortgage broker partners, we will continue to fund loans on which we have sent closing documents out through May 11, 2007.

To best serve your customers, we request that you place loans currently in the pipeline on which we have not sent closing documents to other lenders.

We regret having to take this action at this time and are hopeful we can partner with you again sometime in the near future.

If you have any question please call 360-433-6260.
Thank you for your understanding.

E-Mail to MILA Workers: Business Ends Today

Employees at wholesaler Mortgage Investment Lending Associates Inc. (MILA) got an unpleasant surprise when they opened their e-mail last Friday: "It is with deep regret that due to ongoing negative market conditions MILA is forced to close its doors at the end of business today." Roughly 300 workers lost their jobs.The Mountlake Terrace, Washington-based mortgage wholesaler specialized in the subprime market through its hallmark automated online system that delivered loan commitments within seconds, minutes or hours, rather than the conventional process that could take days.The company’s mortgage lending doubled in 2003, growing from about $550 million in the prior year to well over $1 billion.The rapid growth of the business prompted founder, principal owner and CEO Layne Sapp to purchase an empty office building to house his expanding staff as MILA operations branched into other states.MILA’s growth continued into 2005 as the company made several billions of dollars in loans and brought employment to 700 workers.Foreseeing the eventual downturn in the subprime market, MILA began to pare down its workforce and move into the Alt-A market.Despite such moves, the company was unable to weather the subprime storm as loan buybacks began to haunt MILA.However long Sapp had mulled the closure of the company he began in 1989, the news for staff and brokers working for the company was swift and final.By Monday, the website was already taken down, leaving only a blank white screen.

WaMu Originations Down as Earnings Drop 20%

Loan production fell once more at Washington Mutual Inc. as quarterly earnings dropped 20% on subprime troubles, prompting the company to refinance up to $2 billion of their high-risk mortgages at fixed-interest rates below-market. Washington Mutual, the largest savings and loan in the nation, reported a net income of $784 million for the first quarter, down from $985 million in the same period a year ago. Revenue for the quarter was $3.62 billion, up from $3.59 billion one year earlier. The company’s mortgage division posted a first-quarter loss of $113 million compared with a $52 million profit during the year-ago period. Sales of subprime mortgages accounted for a quarterly loss of $164 million, overshadowing a “solid” performance in home loans to borrowers with better credit. "The decline in home loan volume from the fourth quarter was the result of the proactive steps the company has taken to reduce its subprime exposure through this point in the cycle," said Chairman and CEO Kerry Killinger.WaMu said it has scaled back its subprime portfolio and has set aside $234 million for the quarter to cover future loan losses from just $82 million in first quarter 2006. At the end of March, Washington Mutual had $20.4 billion of subprime loans, representing 9% of its $217 billion loan portfolio.The Seattle-based company reported that 71% of total volume was adjustable-rate mortgages and approximately $21.9 billion of the total was refinances.Home equity loans represented $8.3 billion of the total quarterly volume, down from $8.5 billion during the fourth quarter.Of the $37.6 in fundings for the quarter, WaMu said that about $22.7 billion came from the correspondent channel, while retail fundings represented $13.0 billion and wholesale volume accounted for $6.2 billion.Washinton Mutual said its mortgage servicing portfolio was $709.2 billion at the end of March, down from $794.8 billion one year earlier.The company indicated that it would refinance up to $2 billion of its own subprime mortgages at fixed interest rates discounted by 0.50%. WaMu has created a team of specialists to guide borrowers who are not yet delinquent but expect an ARM payment increase in the near future. Another group in the company will work with delinquent borrowers on creating financial solutions for their home loans.

Opteum Stops Taking Applications For Wholesale Channel

Real Estate Investment Trust (REIT) Opteum Inc. has announced that it has stopped accepting new applications through the conduit and wholesale mortgage origination channels at its subsidiary, Opteum Financial Services LLC, effectively shutting down those businesses.Opteum suggested that the actions are mostly the result of both deterioration in the secondary market for closed mortgage loans and a long-term weakening of consumer demand for mortgage products and services. "In the last month or so…the secondary market for mortgage loans has experienced significant distress and substantially increased volatility that was initially precipitated by lax underwriting standards, early payment defaults and high delinquency rates involving subprime mortgages and concerns over the general state of the U.S. housing market," said Jeffrey J. Zimmer, Chairman, President and CEO of Opteum Inc. "Recently, some secondary market investors in closed mortgage loans have changed their terms and have delayed settling whole loan trades involving certain Alt-A mortgage products. This has forced (Opteum) to re-market loans in respect of which it believed it had already obtained purchasing commitments, and has resulted in an estimated $22 million pre-tax loss associated with mortgage loans originated by (Opteum),” Zimmer continued.“Because we believe that the current adverse market environment may continue in coming quarters, we intend to exit the Conduit and Wholesale mortgage origination businesses." The Florida-based REIT also said the action will not affect the continued origination of loans through its network of 230 retail loan professionals in 24 offices across Georgia, Florida, Illinois, New Jersey and Massachusetts.

WMC Mortgage Cuts 50% of Staff, ResCap Cuts 1,000

WMC Mortgage, the subprime unit of General Electric Co., announced it would eliminate more than 50% of its staff as Residential Capital, the mortgage unit of GMAC LLC said it was terminating about 1,000 positions in addition to a previous round of 1,000 layoffs from January.Burbank, California-based WMC Mortgage currently employs about 1,470 workers, but plans on slashing that number down to 700.In March, the lender disclosed that it had eliminated 460 positions.The latest round of layoffs follows news that company originations plummeted to $3.4 billion in the first quarter from $9 billion during the previous three months.In addition to the workforce reductions, offices will close in Costa Mesa and San Ramon, California, as well as Addison, Texas.WMC has recently replaced some of the company’s top executives, including the chief executive officer and chief finance officer.GE acquired WMC in 2004, but the subprime unit is estimated to represent just a fraction of a percent of profit at GE in 2006. Meanwhile, Minneapolis-based ResCap said between 600 and 700 workers would lose their jobs by midyear, and a minimum of 300 vacant positions won't be filled. The GMAC unit announced in January it would layoff 800 employees through October and would leave another 200 open job positions vacant.Following the reductions, ResCap will have about 12,000 employees.In the past weeks, the company has also seen the exit of its chief executive officer, chief financial officer and treasurer.

The List Continues To Grow

MILA goes under

As of 4/20/2007 rumor has it that Mortgage Investment Lending Associates (MILA) is going under. At 4:30 CST the web site was down with the home page listing a thank you page to all the brokers that conducted business with MILA over the years. It read
"MILA would like to thank all of the mortgage brokers we've done business with over the years. Due to current market conditions, we do not have the resources available to continue lending. It is with great regret that we announce we are ceasing operations effective April 20th, 2007."
As of 9:00pm CST the website homepage is back on but you can't access the back office.

H&R Mortgage Corp. Adds Lay-Offs

An Option One Mortgage Corp. subsidiary is closing its doors. AcuLink Mortgage Solutions LLC has filed a Worker Adjustment and Retraining Notification Notice with Florida indicating it will lay off 67 people on June 12, 2007. According to an announcement, the company was originally launched in 2005 with the help of ValuAmerica to provide settlement services to H&R Block Mortgage Corp. and initially included a staff of approximately 30 people. H&R Block Mortgage Corp. announced earlier this month that they had laid off 141 employees in Tampa due to a move to H&R Block Bank.

ResCap to cut 1,000 more jobs

Residential Capital will eliminate more than 1,000 jobs as the company tries to regain its footing amid a severe slump in the subprime mortgage market.
The Bloomington-based mortgage lender, one of the country's largest, said Wednesday that about 86 positions in the Twin Cities will be affected. The company, which is jointly owned by General Motors Corp. and Cerberus Capital Management, employs 1,900 people in Minnesota.
The cuts come on top of a 1,000-job reduction the company announced this year, which included 47 local positions. Together, the two rounds of job cuts represent about 15 percent of Residential Capital's 13,000-strong workforce.
Most of the layoffs will be in the company's U.S. home mortgage operations and corporate services, which includes finance, human resources, legal and marketing, according to company spokesman Brett Weinberg.
"Because the U.S. mortgage market continues to underperform, we regret to have to announce additional layoffs," Chief Operating Officer Jim Jones wrote in a memo to employees. "The reductions are an unfortunate necessary step in the plan to return [Residential Capital] to health and profitability, and to position us to effectively capitalize on the opportunities ahead."
About a third of the 1,000 positions are already vacant, leaving 600-plus people who will actually lose their jobs.
The layoffs come one day after the company said that Chief Executive Bruce Paradis will retire in June. Over the past month and a half, most of the company's senior management team has left, including its chief operating officer, chief financial officer and treasurer.
Jones, who joined Residential Capital, or ResCap, in March, will replace Paradis.
Rising subprime mortgage defaults have taken a toll on lenders across the country, but ResCap has proved particularly vulnerable. The company offered some of the riskiest mortgage products, including interest-only mortgages, and subprime loans that required little or no income documentation.
Last month, the company said it lost $651 million in the fourth quarter, compared with a profit of $118 million during the same period a year ago.
In 2006, ResCap earned $182 million, compared with a profit of $1 billion the previous year.
"ResCap did not move quickly enough to reduce exposure in the face of this downturn," Paradis recently told investors.
ResCap has said that it will cut costs, tighten underwriting standards, and accelerate "lost mitigation efforts" to help borrowers pay their bills and avoid foreclosure.
The company will also receive $1 billion in new capital from GM.
But company executives and analysts warn that the subprime market will deteriorate further this year.
Interest rates on more than 10,000 of the company's subprime adjustable-rate mortgages will reset by the end of the year, with many borrowers seeing their monthly payments jump by more than 30 percent, which likely will lead to more defaults.
Jones' memo said he is confident ResCap will recover.
"The next few months will determine how well ResCap will emerge from this market disruption and how fast we can begin to capitalize on the opportunities ahead," Jones said. "We are already seeing signs that the strong will grow stronger. We will be in their company."

Three Wholesale Lenders Shut The Door on Business

Both First Horizon Home Loans and First Source Funding Group Inc. have shut down their nonprime wholesale lending channels as Homefield Financial announced the closing of its Alt-A wholesale lending division.Irving, Texas-based First Horizon will no longer be accepting applications from mortgage brokers for nonprime loans.The decision to exit the nonprime business comes as many wholesale lenders have seen profit margins evaporate, coupled with dwindling bids from Wall Street firms distancing themselves from such loan pools.About 60 positions will be eliminated as a result of the strategy, which will not affect their conforming and home equity lending to brokers.Irvine, California-based First Source announced that it has ended mortgage banking operations, effective immediately.The company said it hopes to accommodate existing transactions by making “every effort” to fund locked loans with loan documents that were drawn and released by March 8, 2007.On March 9, First Source announced that it stopped accepting new loan applications, as well as requests for rate locks or loan documents.Also based in Irvine, Homefield Financial has announced that it is shutting down its Alt-A wholesale lending division."It is with great regret that Homefield announces that the Homefield wholesale division will no longer be accepting broker applications for consideration of a broker/lender relationship," said Homefield on its website.Homefield was established in 1998 and went on to make the Inc. 500 for both 2004 and 2005.Last August, the company reported $2.5 billion in annual originations and announced an expansion into Las Colinas, Texas to create 200 new positions.

WareHouse USA Takes an Exit

The warehouse lending subsidiary of NovaStar Financial Inc. is getting out of the mortgage industry. According to a statement posted on their website, Warehouse USA Capital Corp. has stopped taking new applications for their mortgage warehouse lines-of-credit. Existing clients are being notified and their loans will now be closed according to their agreements with the Roswell, Ga., company. The lender which was reportedly founded in 2003 as NovaStar Capital Inc., financed up to 100 percent of Alt-A and nonprime mortgages. Its programs included USA Direct, USA Express and USA Pro. The statement released by the ender stated," All new funding activity by Warehouse USA under existing warehouse lending lines is expected to be concluded on or about April 27,2007. The closure of the warehouse lending business will not impact direct mortgage loan funding by, or any other business of, any NovaStar entity."

Fieldstone Cuts 14% of Workforce

Columbia, Md. based company, Fieldstone announced it is consolidating operations and trimming staff. Six wholesale operations offices will be shut down immediately, however, the Account executives will remain in the areas where the offices are being closed. Nine additional branches will be closed, while home office staff reductions are being evaluated. According to the company's statement, currently 125 people are affected by the layoffs. They expect all consolidation to be complete by the second quarter. Credit-Based Asset Servicing and Securitization LLC - or C-BASS, which has agreed to acquire Fieldstone, lowered its acquisition price from $5.35 per share to $4 per share. Their reasons for lowering the price per share were additional liquidity problems. Fieldstone also announced in February it paid $10.6 million to settle shareholders litigation. The real estate investment trust said it expects to take a $550,000 pre-tax charge in the first quarter as a result of the consolidations.

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).