A Massachusetts-based lender has been inundated with so much refinance business that its originations have exceeded its warehouse capacity. As a result, the company has suspended its third-party lending.
Mortgage Network Inc. today issued a bulletin to its mortgage brokers and loan correspondents indicating it will immediately halt third-party originations.
Loans already in the pipeline must be locked by tomorrow and closed by Dec. 31, according to the memorandum.
The Danvers-based firm, which also operates as MNET Mortgage Corp., blamed “unprecedented market conditions” for the decision to quit handling broker and correspondent business.
“We are truly committed to providing you with timely communications and services during this period,” the bulletin stated.
In June, Mortgage Network announced it would expand its wholesale operation into five new states. It already operated in more than 40 states.
In an statement at the time, Vice President Brian Koss told MortgageDaily.com that the company originated $3 billion in 2007 and projected 2008 production of $4 billion. To support the growth, it had hired 85 people over the prior 12 months and planned to hire another 100 over the following 12 months.
The company had claimed to be “the largest independent mortgage company in the Northeast.”
In an interview today, Koss said the recent decrease in mortgage rates resulted in a surge of refinance applications. The increase in activity pushed business beyond its warehouse capacity.
“Warehouse lines and lending have become greatly restricted,” Koss said. “So many warehouse lenders have left the business, and they’re gone. So, many people just don’t have the same capacity that we had in 2003.”
He said the company will attempt to expand its warehouse lending capacity. But if additional lines are not secured or business doesn’t slow down by January, the suspension of broker and correspondent business will become permanent.
If the third-party business closes permanently, around 25 to 35 employees could be impacted.
The retail channel, however, will not be impacted.
An online overview of Mortgage Network indicated it offered non-conforming, A- and government loan programs as well as hybrid adjustable-rate mortgages.
Growing Wholesaler Hiring
A wholesale lender based in New England has added more than 80 employees over the past year and plans to add another 100 over the next year.