A California-based company has eliminated its wholesale operation, converted from a mortgage banker to a mortgage broker and eliminated more than 70 branches. It hopes to emerge from bankruptcy with a new reverse mortgage strategy.
EquiPoint Financial Network is fighting to survive a Chapter 11 bankruptcy filing. It has fled the wholesale business and is trying to re-emerge as a broker concentrating on reverse mortgages.
"We're making moves to survive," EquiPoint President Bruce Barnes told MortgageDaily.com. "We've put in new technology. We're doing more training for our branches. We're marketing. And we put quality controls in place to emerge with a stronger platform and move forward."
Just a few years ago, the San Diego-based company had 85 branches and nearly 500 employees. But Barnes said the company, like others caught up in the credit crunch and market collapse, had difficulty selling loans on the secondary market -- leading to the shutdown of its wholesale operation.
When Barnes took over late last year, employment was down to 125 from about 300 two years ago. The number of branches dropped to its current number of 14. There have been no major layoffs in recent months, but more than 100 loan producers are no longer working as independent contractors for the company because the work has dried up.
Barnes would not divulge the company's current loan volume.
"We're now a full brokerage operation," Barnes said. "We're slowly inching back ... with a significant amount of production heavily weighted in reverse mortgages."
EquiPoint shut down the wholesale operation in February and filed for bankruptcy in June, listing assets of about $550,000 and liabilities of about $5.3 million.
Barnes said the owners have pumped "millions and millions of dollars" into the company, though he did not say exactly how much.
"Unlike other companies that basically tried to wipe it all away ... we're working through it," he said.
EquiPoint was originally part of Axio Financial Services, which purchased at least four smaller mortgage companies over the last four years, including Mortgage Net USA in Oregon. In the summer of 2006 MortgageDaily.com reported that Axio was managing the Sierra Mortgage Investment fund, a limited partnership that was operating similar to a Real Estate Investment Trust.
Barnes said he and other new managers came on after the old management was purged.
"Our old management team did have a good philosophy to make the company work," he said. "But there were just a couple of bad branches that created havoc with the rest of the company."