Low loan-to-values were apparently not enough to sustain a California-based hard money wholesale lender that handled nearly $1 billion in applications annually.
FlexPoint Funding, a hard money lender in Irvine, Calif., has apparently shut its doors and ceased doing business.
It's Web site is no longer operating. Phone numbers for the company listed on the Internet are disconnected or go unanswered, with no voice mail or other messaging system available. And it has lost or canceled its licenses in at least five states - Illinois, Nevada, Virginia, Nebraska and Rhode Island - according to research by MortgageDaily.com.
All of the license activity has taken place since Aug. 1.
FlexPoint employed 150 people earlier this year, according to ZoomInfo.com, an online business information site. And in 2005, the company processed 4,801 loans that totaled just short of $1 billion, reported AllMortgageDetail.com, a Web site that tracks mortgage company activity.
The company was founded by Ryan Knott and Stanley Gordon in 1998. It was described in Broker Banker, an industry trade journal, as one of the "three largest institutional hard money lenders in the nation."
In an online advertisement soliciting mortgages in Maryland, the company said borrowers can get loans even after they have declared bankruptcy or foreclosure.
"FlexPoint Funding has the resources to give home owners another chance," the company said. "We have the loan programs and products that separate us from the competition and give us the flexibility to say 'yes' to your new home loan."
In the Broker Banker article, Knott explains the company's strategy, which in hindsight mirrors the problems now gripping the subprime industry.
FlexPoint said it identified a $50 billion segment that "was largely ignored" by many lenders - borrowers with FICO scores under 550.
Debt ratios went up to 50 percent, while programs were offered for borrower just out of bankruptcy or foreclosure, according to an archived copy of program guidelines reviewed by MortgageDaily.com. Other offerings included stated income loans and programs that did not require collections, judgments or charge offs to be paid.
"With few exceptions, as long as the LTV and benefit to the borrower is there, we can work with just about any borrower's situation," Knott says in the story.