A California company that was still expanding earlier this year is quitting wholesale and reorganizing into a small retail operation. Secondary buyers who backed out of commitments forced the drastic measures.
Transnational Financial Network Inc. issued a press release Monday indicating mortgage market chaos has forced it to suspend wholesale lending operations.
"The turmoil in the mortgage industry has made wholesale mortgage operations almost impossible," Transnational Chief Executive Officer Joseph Kristul said in the statement.
Kristul explained, "Buyers of mortgages have ceased to fund broad categories of mortgages, often refusing to honor previous commitments to purchase mortgages that we have funded. In other instances, mortgage buyers will modify the terms on which they have issued previous commitments."
The company said it will retain a handful of senior executives to continue retail operations from San Francisco, though a Campbell, Calif., retail office was closed.
Earlier this month, it had announced an agreement to sell mortgage operations to an affiliate of CEO Kristul and President Maria Kristul, noting at the time, "Transnational has seen its operations and capital position deteriorate."
In January, Transnational announced it would acquire AMC Mortgage, a Texas-based mortgage banker that closes about $130 million annually. And in October, the lender announced it acquired the residential mortgage lending division of Texas Capital Bank.
"The inconsistent responses consume capital, and we often take losses on mortgages we have funded," Kristul continued in Monday's statement. "With our severely diminished capital base, we lack the resources to continue wholesale operations in this environment."