Accredited Home Lenders Inc., armed with new account executives, a fresh slate of brokers, new nonconforming mortgage products and a $100 million capital infusion from Lone Star Funds, is reviving its business. The move, however, appears to be an uphill battle in the face of a collapsed secondary market.
"Accredited Home Lenders is back and stronger than ever with substantial financial backing from Lone Star," said Patty Derleth-Kennedy, a new account executive, in an e-mail from her Orange, Calif., office to brokers. "We do Alt-A, B, and C grade residential loans nationwide."
Lone Star acquired all the outstanding stock of Accredited on Oct. 11 and consummated its merger with Accredited the next day, according to the companies.
Derleth-Kennedy told MortgageDaily.com that she was one of a number of new account executives who came from other mortgage companies, though she declined to reveal where she previously had worked.
"I see this as a huge opportunity to be a part of the revival of subprime after so much recent turmoil," she explained in her e-mail.
Accredited is no longer hiring account executives but is still seeking to fill at least six other top positions in its offices in San Diego, Calif.; Lake Mary, Fla; and Vancouver, Canada, according to its Web site. The San Diego-based company also has instituted a 12-month management trainee program for college graduates and recently discharged junior military officers to help "fill key management positions with qualified, professional team leaders."
Accredited initiated an updated two-page broker approval application and an updated four-page broker agreement on Oct. 15 which its existing brokers, as well as new brokers, must execute. The agreement requires brokers to repurchase loans that default and return all fees paid by Accredited. But in instances of early payment defaults, brokers will have no obligation to purchase the loan but still will have to return all fees.
Products, according to its rate sheets, include 30-year fixed-rate loans and 5-year ARMs for borrowers with credit scores as low as 525. Maximum loan-to-values range from 55 percent to 90 percent, depending on credit scores. And interest rates currently range from 8 percent to 9.625 percent for those with scores of 660, and from 10.5 percent to 11.25 percent for those with 525 scores, depending on LTVs and whether a loan is fixed- or adjustable-rate.
In addition, stated income loans, although not allowed for wage earners, are still available for self-employed borrowers with LTVs no higher than 80 percent and credit scores of at least 600. Loan amounts range up to $750,000.
Accredited, which promises loan approvals "in minutes," using its automated submission and approval engines, is now also offering jumbo loans up to $1 million and second mortgages up to $250,000, according to its Web site.
The subprime lender shut down its retail operation, closed 10 wholesale centers and eliminated half of its staff in August, resulting in over 1,000 layoffs. About 340 wholesale employees were spared.
The move to restart operations was made amid a devastated secondary market for nonprime loans to borrowers who have grown wary of risky products in today's faltering real estate market. It remains to be seen whether the loan programs now offered by Accredited will be met with enough borrower demand to sustain a viable business model.
"The market we're re-entering looks vastly different from anything we have seen in recent memory, with a smaller pool of eligible customers, more stringent product eligibility requirements, and far fewer brokers and lenders," Accredited President Joseph Lydon said in a recent letter to brokers. "Even in this brave new world there is significant opportunity for those of us who believe in doing right by the customer."
Corporate communications director Richard W. Howe, to whom requests for more information were referred, did not make himself available to MortgageDaily.com.