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The Mortgage Graveyard
Failed, closed and a c q u i r e d mortgage-related entities.



Credit Line Loss Kills Company

Realty Mortgage plans bankruptcy filing

February 5, 2009

By JERRY DeMUTH


A 20-year-old Mississippi-based company with nearly 300 employees operating out of offices in five states halted originations and plans to file bankruptcy after losing its line-of-credit. But around 70 Tennessee employees hope they already have a new home.

Realty Mortgage Corp. suspended operations and plans to file for bankruptcy Friday, MortgageDaily.com has learned.

The shutdown came as Realty Mortgage's line-of-credit for more than $200 million from Bank of America Corp. subsidiary Countrywide was cut off, Tennessee employee Chuck Gregory told MortgageDaily.com.

"They decided to pull the plug," Gregory said, further noting that employees were not being paid.

He explained that the line-of-credit was used to meet payrolls as well as fund loans. The bankruptcy filing was being planned to enable the company to pay employees.

"We're in the middle of negotiations with Prime Lending out of Texas to buy at least the Tennessee operations," Gregory said. "There were 70 employees in Tennessee. The Tennessee market has been profitable."

More than 200 worked in offices in other states, he said.

With "four million [dollars in loan applications] sitting on my desk," he said he's hoping that "it'll all come together."

Some loans were still being closed on Thursday, a loan closer in the Brentwood, Tenn., office told MortgageDaily.com.

"Our office is open and I'm still closing loans," he said.

In addition to six offices in Tennessee, Realty Mortgage also had two offices in Georgia, and single offices in Texas and Florida as well as its headquarters in Flowood, Miss.

Other offices were trying to find their own ways to be able to continue.

"We're all looking to restructure," John Linville, of Georgia, told MortgageDaily.com. He said that closings had been stopped on Wednesday.

But some offices appear to have been closed, based on the inability to connect to phone extensions callers were directed to.


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

e-mail Jerry at [email protected]
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