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Net Branch Failed Without FHA

Liberty One shutting down

January 7, 2009

By JERRY DeMUTH


A 100-branch company is closing down, leaving many managers scrambling to find new homes. One manager speculated that the firm's demise was its inability to quickly establish government lending in each state.

Liberty One Lending has shut down.

"Effective immediately, Liberty One is ceasing all operations," Matthew D. Goddard, chief executive officer and owner of Liberty One, said in an e-mail to employees Monday.

At least one branch manager, in response to a phone call, reportedly received a text message from Goddard stating that "I don't have the money to pay you what you're owed."

While the CEO indicated loans in process could be closed until Jan. 31, no loan officers were likely to close any more loans with the company since they had yet to be paid for December closings, according to interviews with three branch managers.

A former manager of one of Liberty One's nine Arizona branches with 17 originators told MortgageDaily.com that he had spoken with several branch managers who, along with their loan officers, were owed as much as $38,000 for December.

He said he was resubmitting more than 50 loan applications to a new company with whom he has become affiliated. "That puts us about a week behind," he said. "It's a lot of extra work."

Two weeks before the shut down, he said that Goddard had told him "that everything was good, don't worry," and the company was planning on signing a contract with an Internet marketing company.

"There was an extreme lack of communication," he said. "Now everything is over."

Goddard couldn't be reached for a comment. Liberty One's main phone number, as well as the phone numbers for many of its branches, were no longer functioning. The main Web site has been shut down.

The Goodyear, Ariz.-based company employed nearly 1,000 loan officers in around 100 offices. The branch network was licensed in all 50 states. In addition to its lending operations, the company also operated a real estate brokerage, Liberty One Real Estate. Two managers said it was their impression that Liberty One Real Estate would continue to operate, but under a new name.

"We're scrambling to find a new company," Albert Black, manager of an Arizona branch, told MortgageDaily.com in an interview.

"Things don't look good," said another manager, who also said he was trying to establish an affiliation with another company.

But a third manager, embittered by the experience, said, "I'm not going to go with another broker. Banks are where it is right now."

Problems began emerging in early 2008.

"A year ago, things started to deflate," said one of the managers, who asked not to be identified. "Then things started to fall apart in spring."

Some offices were closed and some loan officers began operating from their homes, the manager said.

He explained that one problem was that they did not receive FHA approval in some states until early 2008. Although licensed in all 50 states, a Liberty One Web page indicated it was FHA-approved in only 28 states.

"It cost us not to be approved when we needed to be," the manager stated.

One unpaid originator said she had "money invested in this loan," including credit reports costs, without even these out of-pocket expenses being reimbursed.

"It's over," Goddard reportedly said in the text message. "Everything is done.

"I worked my whole life for nothing."


Jerry DeMuth is an award winning journalist who has been reporting for four decades.

e-mail Jerry at [email protected]
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