A Florida-based real estate investment trust is getting out of broker-originated lending. Among reasons cited for the exit was erratic behavior by secondary market investors.
Opteum Financial Services LLC will abandon its correspondent and wholesale origination channels, according to an announcement today from parent Opteum Inc. No further applications are being accepted.
The Vero Beach-based company attributed the failure to secondary market deterioration and weak consumer demand.
Chairman and CEO Jeffrey J. Zimmer noted in the announcement that a partnership with Citigroup Global Markets Realty Corp. launched late last year appeared to position Opteum for profitable growth.
"In the last month or so, however, the secondary market for mortgage loans has experienced significant distress and substantially increased volatility that was initially precipitated by lax underwriting standards, early payment defaults and high delinquency rates involving subprime mortgages and concerns over the general state of the U.S. housing market," Zimmer said. "Recently, some secondary market investors in closed mortgage loans have changed their terms and have delayed settling whole loan trades involving certain Alt-A mortgage products."
Opteum said it had a $22 million pre-tax loss as a result of secondary purchase commitments that weren't honored.
The company, formally known as Bimini Mortgage Management Inc., had been on an acquisition binge.
Just last year, Opteum acquired Aclarian Mortgage and purchased Baytree Lending Co.
Less than a month ago, the REIT issued an announcement refuting suggestions in an investment banking report that it might not be able to secure covenant waivers on its warehouse lines of credit, among other things.
The lender will continue to originate prime mortgages through a network of 230 retail originators from 24 offices in five states, the press release indicated.