A jumbo wholesaler is winding down but hopes to resurge through a new strategic partner.
Metrocities Mortgage has elected to discontinue its joint venture with No Red Tape Bancorp, a Metrocities spokesperson told MortgageDaily.com.
"We will be winding down the division in an orderly manner," the spokesperson said. "We have not closed our doors, but it does mean we are still accepting loans but on a limited basis."
"No Red has been focusing on Alt-A and B products and those products have experienced high rates of delinquencies," the spokesperson cited as the reason driving Thursday's disclosure of the decision to discontinue the division.
No Red is a jumbo/super jumbo specialist but had expanded its menu, moved into the Alt-A and Alt-B and shifted focus to conforming loans, according to the spokesperson, who could not say when the shift occurred and declined to comment on what loans were still being funded.
The representative declined to comment on whether Sterling Partners had or would be buying either No Red or Metrocities, but did say that a transaction with Sterling was not complete and that Blake Scheifele, principal of No Red Tape, "has indicated he plans to conduct future business under No Red Tape with a new strategic partner."
As of May 18, No Red had about 50 employees, of which 35 have been absorbed by Metrocities and 15 left the company. The wholesaler had close to 100 employees at its peak, the spokesperson said. Last July, the wholesaler said it would add approximately 50 outside sales representatives within six months to double its sales staff.
No Red Tape's latest mortgage production-specific announcement stated the company had funded a record $3 billion in loans during 2005 -- almost 60 percent higher than in 2004. August 2005's volume of over $322 million had been its best month so far. Because No Red is a private company, the spokesperson declined to disclose more recent volume figures.
The Sherman Oaks, Calif.-based company touted that it approved billions of dollars in jumbo loans for its brokers since its founding in 1998, most in as little as 24 hours. The company said it offered fixed, option ARM, and home equity line of credit products from $300,000 to $3 million and that most of its products came with interest-only options. Second mortgage products were cited on its Web site.
Among achievements No Red listed on its announcements were the June 2005 launch of its sister company, Zero Down Mortgage, a national wholesaler specializing in 100 percent purchase-only loans.