Bad Credit Mortgage Woes Bury Three More Lenders

The housing market may be turning the corner, but subprime home mortgage programs boiled over and have sunk three more home loan lender groups, according to recent reports.

Lancaster Mortgage Bankers LLC, a New Jersey lender that offered expanded criteria programs and specialized in Alt-A and No-Documentation loan programs, recently abandoned its mortgage broker business.

“Due to dramatic and recent changes in the mortgage banking business we have decided that it is time to close down our operations,” read a message on its Web site recently. “As of this date, Lancaster Mortgage Bankers LLC will no longer be funding home loans.”

Lancaster said it operated in 16 states.

Meanwhile, No Red Tape Mortgage will be winding down operations, one of the joint venture’s partners reports.

No Red Tape, which reported $3 billion in 2005 originations, had been a jumbo specialist but expanded into the Alt-A mortgage and Alt-B mortgage business, according to the spokesperson.

The high rate of delinquencies in those home mortgage loan markets triggered the decision to abandon the business, execs say.

The Lending Group Inc. suspended all operations, according to a recent notice posted on its Web site.

The Jacksonville-based mortgage lender reported 300 percent growth in 2005 - landing it on the Business Journal’s No. 5 spot of the Fastest Growing Private Companies in North Florida.

Last year, the home loan lender reported 74 employees with $500 million in originations from 36 states - moving it up to the No. 4 ranking.

Helping to thrust it forward were programs with credit scores down to 500, unseasoned mortgage refinance activity and closing funds, and 100 percent loan-to-value mortgage loans with 620 credit scores.

Debt ratios went as high as 55 percent while home loans maxed out at $1.5 million.

SOURCE: Mortgage News Daily