Mortgage Daily Logo

Branch Acquisition Binge Turns Sour

Mortgage News

Following a two-year acquisition and growth binge, a Las Vegas-based “branch consolidator” has halted business and is attempting to survive through a restructuring.

Shearson Financial Network Inc. announced Thursday it has temporarily discontinued all operations.

The company said it is considering alternatives to its present business model. It is also mulling the sale or licensing of some of its assets.

Shearson, which reported earnings of $2.8 million during 2006, previously utilized warehouse lines to fund its business. The latest announcement indicated its revenues are primarily derived from mortgage brokering.

“The mortgage banking industry has undergone a severe restriction of its credit facilities due to the collapse of the subprime loan market,” the announcement said. “Financial institutions, such as warehouse lenders, have responded by raising the capital costs necessary to bank a loan in their facility. These increased costs have made banking a loan substantially more expensive and have had an adverse effect on the company’s liquidity.”

The company said it has retained Harry R. Kraatz to oversee the restructuring of its balance sheet and implement a new business plan. 

Kraatz has worked with several companies that went into bankruptcy.

The dramatic downturn for Shearson, which has previously referred to itself as “a consolidator of independent mortgage brokerages,” follows two years of acquisitions and expansion.

In June 2007, Shearson acquired the assets and operations of Dollar Mortgage Corp. in a $1 million cash and stock deal. Dollar reportedly originated $300 million during 2006.

Shearson announced an expansion in May 2007 that would enable it to handle refinances of delinquent borrowers. The company estimated the market for these loans at the time was $300 billion.

Subsidiary Shearson Home Loans reported in April 2007 it had requested its warehouse lenders to double its warehouse capacity. It also announced at that time that it was “facilitating a home for many of the displaced loan officers and wholesale account personnel within Shearson and welcome their business.”

A year ago, Shearson announced a joint venture with Stinson Financial, enabling that firm’s 30-branch loan origination platform to operate within Shearson’s mortgage banking infrastructure.

In January of last year, Shearson said it added a warehouse line-of-credit with Sterling Eagle. It noted at the time that it had boosted the number of states in which it was licensed in from 17 to 47 during 2006.

Shearson announced a deal to acquire Irvine, Calif.-based Allstate Funding in a $5 million cash-and-stock deal in August 2006. That deal was expected to push annual production past $1 billion and employee count to more than 450.

In June 2006, Shearson said it reach an agreement to purchase certain assets of EHomeCredit Inc. in a $4.7 million stock-and-cash deal.

Shearson was acquired by Consumer Direct of America, which changed its name to Shearson Financial Network in June 2006.

Related Posts

Centex Home Equity Announces Name and Brand Change to National Mortgage, LLC

Third-Quarter 2012 Mortgage Litigation Index

Lawsuits involving excessive fees, servicing fees and loan fees beyond state maximums. Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story Fannie Mae and Freddie Mac Orangeburg County, Richland County, South...

Centex Home Equity Announces Name and Brand Change to National Mortgage, LLC

Whistleblower Lawsuits

Litigation related to loan servicing, including escrow issues, transfer of servicing and servicing borrowers in bankruptcy and foreclosure.   Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story Bank of...

Centex Home Equity Announces Name and Brand Change to National Mortgage, LLC

Net Branch Lawsuits

Litigation involving net branch operations. Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story PHH Mortgage Corp. Mathews Supreme Court of Virginia na Court held that the term "branch office" includes not only...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming paperwork has been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and furniture need to...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand-new mortgage loan can be a difficult task, especially for first-time homeowners.   After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first...

Newsletter

Don’t worry, we don’t spam