twitter linkedin
facebook google+
Search:

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News

 

Mortgage News

HOT Topics

production

servicing

compliance

legal

fraud

secondary

jobs

appraisal

site map

www.loan-academy.com/
Corporate Mortgage News
M e r g e r s, a c q u i s i t i o n s and private and public offerings. Other corporate activity including executive appointments, bankruptcies name changes.


Servicing Drags Down Company

Wealthbridge laying off employees following failed acquisition

Sept. 27, 2010 (updated 7:20 pm)

By MortgageDaily.com staff


After years of operating successfully as an originator, a mortgage banking firm operating from Oregon decided to get into distressed servicing. But a deal with a hedge fund, a failed acquisition and dissatisfied insiders helped bring down the company -- which still hopes to salvage its production operations through an asset sale.

In a Worker Adjustment and Retraining Notification filing Friday with the Oregon Department Community Colleges & Workforce Development, Wealthbridge Mortgage disclosed it was laying off 109 employees as a result of an office closing.

The office location of the layoffs is Beaverton, Ore., where the company's headquarters are located.

But Wealthbridge President Scott Everett says the company is not necessarily closing down.

"There's a chance we're going under," Everett said in a phone interview. "We've got some things we're working on. But, frankly, we're preparing to transition, do an asset sale and open as a different branch."

Everett co-founded the company with his brother Craig as Gateway Financial Services in 1994. It changed its name to Wealthbridge in 2007. Earlier this year, Wealthbridge became part of the Lenders One Mortgage Cooperative.

The lender was "plugging along" generating 20 percent growth in retail residential originations when Everett became interested in refinancing distressed assets. In the development of business a couple of years ago, he met Joseph D'Urso, who worked across town at Merrill Lynch subsidiary Wilshire Credit Corp. In a public profile, D'Urso says he was with Merrill Lynch from 2006 to 2009.

Everett said D'Urso agreed to help Wealthbridge raise capital for the purchase of distressed assets. D'Urso had a handshake agreement and a $50,000 preferred stake in Wealthbridge -- an amount Everett referred to as "barely anything."

Another Wilshire executive, Ken Frye, reportedly agreed to help Wealthbridge build a servicing platform. His public profile indicates that he was a senior vice president at Wilshire and worked there for 11 years. Frye was an employee who had no equity interest in Wealthbridge, though he is a board member, according to Everett.

The trio began the servicing venture in early 2009. The first deal was 68 severely distressed loans from Fortress Investment Group LLC subsidiary Fortress Credit Corp. The deal, negotiated with Fortress Managing Director Michael Fallacara, went well and led to an agreement for Fortress to immediately give Wealthbridge 1,000 loans, including pre-paid servicing fees to help with boarding expenses, and follow that up with another 1,000 loans. In return, Fortress was to receive a warrant to acquire stock in Wealthbridge.

As part of the original Fortress agreement, Wealthbridge agreed to a consent clause that would require the consent of Fortress if Wealthbridge was to be sold.

But while the Fortress deal went well, Everett claims D'Urso was bringing in deals that would "keep blowing up."

In a statement made following the publication of this story, D'Urso said he stands to lose money if Wealthbridge fails.

"I am not a voting equity holder, an officer, an employee or a
board member of Wealthbridge and have no control over the decisions that Scott Everett makes," D'Urso stated. "Beyond that, I have no comment."

Meanwhile, the servicing division was losing a "couple hundred grand a month," primarily from payroll expense, and the origination division wasn't making enough to offset the servicing losses. The deterioration in the balance sheet began to concern the company's warehouse lender, GMAC.

The deal with Fortress helped cut the monthly losses to around $100,000.

But a slowdown in originations earlier this year cut into critically needed revenue and led to a covenant breach with GMAC. Everett said he warned D'Urso that it one of his deals didn't close -- the company would have to be sold.

Nothing closed.

So Everett sought a suitor and found one: publicly traded DJSP Inc.

But D'Urso and Frye didn't see that deal as great for themselves.

"Ken told me, he said, 'Scott, I didn't quit a half a million dollar a year job at Wilshire not to hit a home run,'" Everett stated.

"They ended up going behind our back, going to Fortress telling Michael Fallacara that if we did that deal, that Ken was leaving here, and if he left here, the servicing platform was gonna to blow up, and it was going to cause Michael, in Michael's words, 'all kinds of brain damage,'" Everett said.

Because of the consent clause, Fortress had to approve any sale to another company. But D'Urso and Frye were pushing another an acquisition by another group led by Brian Plunkett, though Everett suggested that deal was fraudulent because the acquiring group was dragging its feet as Wealthbridge was quickly sinking.

Frye could not be reached for comment.

"My feeling was Joe D'Urso was just doing whatever it took to blow up this other deal with the publicly traded company so he could, behind the scenes, try to put something together," he added.

Fearful of a legal battle with Fortress, DJSP pulled out of its potential acquisition.

One week ago, the Plunkett deal being pushed by D'Urso and Frye blew up. That was followed by a notice of non-renewal with GMAC when the warehouse line expires in October. In addition, bonding issues have been arising.

So Everett shut down the servicing division.

He speculates that, through a possible asset sale, Wealthbridge could become an affiliate or branch of another company.

Out of 130 employees, Everett hopes to keep 80 production jobs intact. Around 30 of the employees were in servicing, and the rest were in administration and operations.

"It's a tragedy that didn't need to happen," Everett said. "It's all about greed and hubris."

next story

back to current headlines

The Mortgage Graveyard
Failed, closed and a c q u i r e d mortgage-related entities.



Servicing News | Servicer Ranking | Delinquency Statistics
Stories about mortgage servicers, delinquency and f o r e c l o s u r e s. Coverage of servicing lawsuits and loan servicing technology.


Secondary Marketing News | Correspondent Lender Directory
Mortgage portfolio trades and forward commitments. Correspondent lending, r e p u r c h a s e s and warehouse news. Secondary marketing statistics and lawsuits.



Warehouse Lending News
Coverage of warehouse lending and new warehouse lenders.

Mortgage Employment News | Employment Index | Employment Statistics
Job additions, layoffs and employment lawsuits. Employment data from the Department of Labor, state tracking, reports and analysis. Job finding tips.



SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter

MBS

mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders