|For the second time since last month, a mortgage banking firm that caters to credit unions has closed the door on new business -- this time impacting hundreds of employees.
That firm was Central States Mortgage.
The Wauwatosa, Wis.-based company stopped doing new business today.
"Central States Mortgage has suspended operations effective March 9, 2009," a message posted on its Web site today says. "Further details will be provided at a later date."
The mortgage banker reports that it was established in 1984 and is owned by 25 shareholder credit unions and the Wisconsin Credit Union League.
Central States services 250 credit unions, and it owns non-conforming third-party lender Direct Mortgage Funding.
During 2007, the company says originations were 4,750 loans for more than $0.7 billion.
"This made us the largest Milwaukee area mortgage banking company and ... third ranked multi-owned credit union service organization in the country," the company boasts on its Web site.
Last month, CU National Mortgage notified its customers that it stopped processing loan originations because its warehouse line-of-credit was cut, its access to Fannie Mae as a delivery channel was lost and it was no longer able to use Fannie's Desktop Underwriter, according to the GTE FCU employee.
A competitor estimated that CU National served 30 to 35 credit unions.
Also during February, Central States parent CMSC Inc. filed a lawsuit against its founders and former management team as well as their new company. The defendants are accused of secretly operating their own mortgage business and warehouse lending facility while they were still responsible for running Central States.
In August 2008, Central States partnered with PBG Financial Services Ltd to acquire Home123 Corp. -- the former retail lending subsidiary of bankrupt New Century Financial Corp.
While a June 2006 announcement indicated Central States employed 400 people, BizTimes Media LLC reported in October 2008 that Central States employed about 200 people, and social networking site Linkedin currently reports between 201 and 500 employees.