A California-based net branch operation that had closed as much as $4 billion annually is now insolvent.
ComUnity Lending, which went through one deep cutback in August, has ceased operations and is apparently trying to stave of bankruptcy.
But a former branch manager told MortgageDaily.com that he does not see how the Livermore-based company can avoid doing so.
Ted Thomas, who until August ran the company’s Phoenix branch, said a turnaround specialist who has been hired to try and save the firm told former managers in a conference call this week that ComUnity has just about $10 million in assets compared to $20 million to $40 million in liabilities.
“I think they the see the writing on the wall,” said Thomas, who is now working for Meagstar Financial. “We were told today if they were pushed into bankruptcy, they’ll go that route.”
Company representatives did not return a phone call to comment. Thomas said Diablo Management Group of San Francisco has been hired to try and salvage what once was a billion dollar a year lender that employed more than 1,500 and maintained a network of more than 100 branches.
ComUnity, a former MortgageDaily.com advertiser, has posted an ominous-sounding message on its corporate Web site.
“We are in the process of conducting an operational audit during which time we have imposed a moratorium on the payment of all balances outstanding as of Oct. 31,” according to the message. “We realized that is most inconvenient for our creditors, the process we are undertaking will ensure fair treatment of all of our constituencies.”
The message gives creditors instructions on how they should prepare invoices for payment and “submit a claim.”
“We would like to thank all of you who have been part of our ‘community’ over the past 27 years.”
According to AllMortgageDetail.com, an online mortgage tracking Web site, ComUnity had loan volume of $3.8 billion in 2005, $3.6 billion in 2004 and $4.4 billion in 2003.
Last year, the company originated 2,559 first lien and 1,432 junior lien home purchase loans and 3,980 first lien and 748 junior lien refinances, according to information compiled by the Federal Financial Institutions Examination Council.
In August, the company announced a major cut of employees from about 140 to 60 and consolidated its operations into just two production offices. Thomas said he recalls receiving a conference call Aug. 31 that the branch operation was being shut down.
“The closed all the retail branches, probably 35 to 40,” he said. “I was kind of stunned. They had assured us they were okay during the credit crunch.”
Thomas said the company had halted subprime lending last year and Alt-A loans earlier this year.
“We felt comfortable because we thought by concentrating on conventional loans we would be okay,” he said.
Thomas estimates former employees are owed about $1 million in back wages.
“It all came to a halt in August,” he said. “We’re just hoping we get paid.”