A national mortgage company that operated as many as 149 branches will be closed down by its parent.
Amstar Mortgage Corp. will be shut down on Dec. 15, parent Amstar Financial Holdings Inc. announced today. Lender commitments will be honored up to that date.
As part of its decision, the parent company has struck an agreement with The Money Store to take over its branch network, the statement said. Employees and branch managers have until Dec. 15 to accept employment with The Money Store, based in Fordham, N.J.
The Money Store, which had been dormant since 2000, was resurrected last year by Morton Dear, a former executive of the company. Rather than using its once omnipresent branch network, the company said at the time it would use an Internet and call center platform.
That business model has apparently been disregarded with the purchase of the Amstar branches.
Houston-based Amstar was still growing its independently-managed branch network as recently as January, when it added three new branches on top of the 23 added during the fourth quarter 2006. Even today, the company still claims on its Web sit to be "one of the nation's leading and fastest growing retail branching companies."
The company closed $1.7 billion during 2006, a company spokesman told MortgageDaily.com in January. At that point, employee count was 700.
Amstar claims it was one of the first mortgage companies to offer its managers multiple compensation programs designed by the company's chief executive officer, Howard Wayland Jr.
The decision to exit mortgage lending was based on current mortgage market conditions, outstanding liabilities created by former unprofitable branches, litigation expenses and the refusal by lenders to honor loan commitments.
Amstar noted it will suspend financial reporting until further notice, adding that if it cannot raise enough capital -- the operations of all its other subsidiaries will also be suspended on Dec. 15.