A New York-based company is closing its wholesale operations as it steps up its retail government business.
Ideal Mortgage Bankers Ltd. announced today it will exit the wholesale lending business.
New broker submissions will no longer be accepted after July 31, though all existing commitments will be honored, the Melville-based company said.
"After conducting an extensive review of our wholesale operations and taking into consideration the inherent risk in the current environment and the direction of the mortgage industry, we have decided to exit the wholesale lending business after approximately a year in operation," Ideal executive Michael Ashley said in the statement.
One mortgage broker recently praised Ideal, which he said funded borrowers with credit scores as low as 500.
Ideal noted that several other major players had also abandoned the wholesale lending model.
The closing is expected to only impact outside account executives, though Ideal didn't specify how many. But on its Web site, around 180 account executives are listed.
Many of Ideal's employees will be redeployed to Lend America, the company's retail channel. The announcement said Lend America, which claims to be "one of the country's fastest growing FHA lenders," was ranked as the 12th biggest FHA lender in the country during the first quarter.
Ideal said it will now concentrate on expanding Lend America.
"Our core competency has historically been as a direct-to consumer retail lender, which is validated by the enormous success over the last two years of Lend America our rapidly growing retail platform," Ashley continued. "With the new housing bill on the horizon, and the momentum that Lend America continues to demonstrate, we have made a strategic decision to refocus 100% of the company's energy and resources on building on the success of our retail platform."
Lend America reportedly employs more than 300 mortgage consultants, many hired from failed companies including American Home Mortgage, Delta Financial Corp. and New Century Financial Corp. The company recently moved its operations into the former offices of American Home.
At the end of June, total headcount was reported at 600.
In March, the company, which transformed itself from a subprime lender to an FHA lender 28 months ago, said it was funding more than $100 million monthly. It plans to be among the five biggest FHA lenders by next year.