MortgageDaily.com has confirmed the demise of yet another California-based nonprime wholesale operation — this one affecting around 300 employees. But the company hopes to emerge again when the market rebounds.
The Mortgage Store has laid off nearly all of its estimated 300 employees and has stopped making loans, a top company executive has confirmed to MortgageDaily.com.
Chief Financial Officer Daniel Rood of TMSF Holdings Inc., The Mortgage Store’s holding company, said the company has laid off 75 percent of its staff and is hoping for a market rebound.
The Los Angeles-based company has also stopped providing work for its network of more than 500 independent brokers. It’s closely-held stock is trading at just 30 cents a share and has basically ceased trading.
Rood said the company stopped making loans in August. Production of as much as $200 million a month during better times had dropped to only about $30 million by late summer.
“We couldn’t originate a loan that we could sell that had enough margins to make any money,” Rood said. “It was cheaper for us not to make loans than make loans; we couldn’t originate a loan at cost and sell it at a loss.
“We had to cut back significantly until this market turns. I’ve never seen it this bad,” said Rood, a 30-year veteran of the mortgage industry. “We’re looking for signs that the market is getting better … and we hope it turns around.”
Primarily an originator of Alt-A and subprime mortgages, the company said in filings with the Securities and Exchange Commission that it originated $355.7 million in mortgage loans during the first quarter of the year, compared with $369.4 million for the first quarter of last year.
The Mortgage Store placed No. 209 on the 24th annual Inc. 500 ranking of the fastest-growing private companies in the nation released in 2005.
The company provided a hint of its problems in the August SEC filing.
“While in recent years, we have experienced rapid growth due to the current market conditions, we are restructuring our workforce and streamlining our operations,” the company said in the filing. “We have instituted a cost reduction strategy to align our cost structure to our revenues. This has resulted in lay offs and cost reductions and may result in further such actions depending on future market conditions.”
The Mortgage Store had previously entered an agreement to acquire Central Pacific Mortgage. But in February, Central Pacific sent a letter to employees indicating it had run out of capital and that it would not be able to maintain operations until that acquisition closed — leaving it out of business.
