Two more mortgage companies have reached the end of the line. One, an Arizona lender that had originated more than $1 billion annually, was granted approval to liquidate by a bankruptcy judge. The other, a California company, has stopped doing new business.
On Tuesday, a bankruptcy judge granted the conversion of Spectrum Financial Group Inc.'s Chapter 11 case to a Chapter 7 liquidation, according to documents filed in the U.S. Bankruptcy Court District in Arizona.
Spectrum had filed a request for the conversion, citing it had "determined that based upon current operations there is no reasonable likelihood of a successful reorganization."
A meeting with creditors has been scheduled for Dec. 18, court documents show.
The Scottsdale-based lender initially filed for Chapter 11 bankruptcy protection on Aug. 28, listing estimated assets and liabilities each of between $1 million and $100 million. The estimated number of creditors was reported at 200 to 999.
Spectrum began as a mortgage broker in 1995 and became licensed as a mortgage banker in 2002, said Jack Hudock, a spokesman for the Arizona Department of Financial Institutions. The company's Arizona mortgage banking license remains active.
Besides the home office, Spectrum has two branches licensed in the state in Peoria and Chandler, according to the department's Web site.
Spectrum did not respond to MortgageDaily.com's requests for comment prior to publication.
Spectrum, founded by Jerry E. Craig Sr., became one of the largest privately held mortgage banking/brokerage companies in Arizona and Las Vegas, Nev., with four branch offices and over 280 employees, according to its Web site. Retail and wholesale volume amounted to over $1.8 billion in 2005.
Spectrum was also licensed to originate and fund loans in California, Colorado, Idaho, Minnesota, Missouri, New Mexico, Oregon, Washington, Utah, Texas and Florida, according to a Web page.
The Lending Connection Inc. has also apparently reached the end of the line.
The Costa Mesa, Calif.-based lender previously posted a notice on its Web site that said, "We are not accepting any applications at this time."
As of today, the site is no longer online. Telephone calls and e-mails from MortgageDaily.com to executives, including Chief Executive Officer Darren Kidder -- who reportedly joined the company in 2002, went unanswered.
Lending Connection, founded in 1995 by President Duane Wellhoefer, employed 150 people, according to archived material from its Web site. It held mortgage licenses in 42 states.
"Considered an industry first in nonprime mortgage banking, Mr. Kidder launched a business model with a strategy of changing the way mortgage financing is offered to the borrower with less than perfect credit," the site said.