A major mortgage lender in Maine is shutting down. Some of the company's former executives have launched their own company and picked up some of its former business.
Downeast Mortgage Corp. is in the process of shutting down its operations, which at one point included more than a dozen offices in Maine, New Hampshire and Massachusetts.
"The company is unwinding, trying to shut down its operations, and doing it in an orderly fashion to make sure that customers in the pipeline are well taken care of and not left in the lurch," a person with the company, speaking off-the-record, told MortgageDaily.com.
He said the closing was expected to be completed by the third week in April.
Officials at the South Portland, Maine-based company did not returned repeated phone calls from MortgageDaily.com.
The company, which began as a construction lender in 1987, describes itself as "one of the leading mortgage companies in New England" on its Web site.
Last winter at least four former officials with Downeast left the company and formed Homestead Mortgage Loans Inc., a new mortgage company in Windham, Maine. None would discuss their departure and whether it was related to Downeast's shutdown.
However, Todd Harvey, an owner of ERA Today Realty in Windham, told MortgageDaily.com that after referring customers to Downeast for some 10 years, he was now working with the same people but at Homestead.
Harvey declined to say anything further.
Last October, Maine Attorney General Steven Rowe sued Downeast and an affiliated company, alleging that they had engaged in unfair and deceptive practices in making commercial loans to finance a residential property after the homebuyers did not qualify for a residential loan.
In June 2007, Downeast was presented with an award from the Maine State Housing Authority for originating the most first-time homebuyer loans in 2006, an award the lender had also received for the previous year.
The full service company also has boasted that it was the state's number one FHA and VA lender.
It reportedly originated 10- to 30-year fixed-rate and a variety of adjustable-rate conventional mortgages as well as fixed-rate, adjustable-rate and balloon jumbo mortgages. It also offered subprime, no-doc, stated-income, no-ratio and no-asset-verification loans, and fixed-rate seconds as well as HELOCs. And it continued to provide the construction and rehab loans with which it had started its business more than 20 years ago.
Downeast processed, underwrote, funded and closed all of its loans.
Last February, it was among seven sponsors of events at the annual conference of the Mortgage Bankers and Brokers Association of New Hampshire, of which Downeast's sales manager, Gladys White, is president.
FOX 23, a television news show in Maine, reported that a major commercial lender that deals with Downeast no longer wants to be part of a risky market and noted the company's brokers reportedly said existing loans are in the process of being sold to other lenders.
An estimated 90 employees were impacted by the closing.