A New England bank, whose motto is "We're Main Street -- Not Wall Street," has shut down its wholesale division because of the low bids and lack of bids on some of its nonconforming loans that are coming from Wall Street investors.
Jeff Moore, managing director at Domestic Bank, confirmed the move when contacted by MortgageDaily.com.
Moore admitted writing a memo announcing the move but declined to say anything further.
In the memo, originally reported by Source Media, he said the lack of bids for low doc and stated income mortgages of 90% LTV made it impossible for the bank to accumulate a product type that has been profitable.
Combination first and second mortgages also had fallen to the low bid and no bid trend, he said, calling the situation "one of the worst liquidity crises for the mortgage industry in decades."
Jeff Baker, head of the Cranston, R.I.-based bank's wholesale division; Executive Vice President Craig Baker, his brother; and bank President Nathaniel B. Baker, their father, refused repeated requests from MortgageDaily.com for a comment.
Domestic Bank says it was founded in 1967 and now has eight offices in Rhode Island and one office in Massachusetts. At least two of those offices, both opened this year, are located within Wal-Mart stores. Another branch, this located in a Wal-Mart in Massachusetts, is scheduled to open later this month.
In recent years, the bank has made a special effort to reach Hispanic immigrants as customers and borrowers, according to information on its Web site.