|A Colorado investment banking firm specializing in acquiring mortgage brokers has scuttled its wholesale lending operation and changed strategies amid the continuing challenges of the subprime market.
About 25 employees out of more than 1,500 that work for the companies in W.J. Bradley Co.'s portfolio have lost their jobs, spokesman William F. Campbell confirmed in an e-mail to MortgageDaily.com.
"W.J. Bradley is an acquirer/aggregator of mortgage companies; it is not a lender, so there is no W.J. Bradley wholesale business per se," Campbell said. "It is wholesale business within Bradley's portfolio companies that is being phased out. Similarly, the company won't pursue pure wholesale companies in its acquisition pipeline."
According to a statement, wholesale originators accounted for less than 3 percent of Bradley's portfolio companies. The mortgage brokers and originators working for Bradley's holdings are on pace to originate more than $4 billion in residential mortgage loans this year, the company said.
"The economics and risk/reward metrics of small-scale, wholesale lending have deteriorated significantly over the past year, making it hard to justify the investment of both management time and capital," William Bradley, president and CEO, said in the statement.
The company said it would "no longer entertain wholesale acquisition opportunities and will focus exclusively on acquiring retail origination platforms."
"Going forward, we intend to invest exclusively in retail originators, either mortgage brokerage or banking operations, and to accelerate the pace of our acquisition program," Bradley said. "Our goal is to acquire an additional $10 billion in retail origination volume within the next 12-18 months."
Morgan Financial, one of W.J. Bradley's portfolio companies, had been considering starting a wholesale unit, which was to have been called Morgan Direct, and would have aggregated the "small amount" of wholesale business that existed across all of Bradley's portfolio, Campbell said.
That plan has been shelved, he said.
Campbell said there has been some misinformation posted on the Internet that Stonecreek Funding, which Bradley is in the process of purchasing, is closing. But Campbell said that acquisition is still pending.
Scott Garner was hired about two months ago as an account executive for what would have been a Morgan Direct office in Scottsdale, Ariz. But as part of Bradley's actions he and seven other employees in the office are out of work.
"Everyone in the subprime market has sort of hit the wall," Garner said in an interview with MortgageDaily.com. "The monthly volume was not very high here; the business really wasn't there."
For Garner, it was the second time in three months he had been downsized because of problems in the subprime market.
"With everything that's going on, it's just the nature of the market right now," he said.