Home News Plano mortgage lender files for bankruptcy after cutting 75% of its staff

Plano mortgage lender files for bankruptcy after cutting 75% of its staff

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Plano-based mortgage companies Dismissed 428 employees last week Filed for bankruptcy protection because of rising interest rates and pressure from the mortgage industry due to affordable housing.

First Guaranty Mortgage Corp. has filed for Chapter 11 Bankruptcy Protection in the Delaware area because of significant operating losses and cash flow challenges due to severe market conditions, the company said Thursday.

According to a company representative, the company canceled the loan application before applying for the loan.

“We have made considerable efforts to address the ongoing financial challenges associated with the mortgage market situation, but ultimately we must do our best for borrowers and consumers. “CEO Aaron Sample said in a statement.

According to the company, the mortgage market has significantly reduced earnings and made it difficult to raise funds.

“A sharp and unexpected decline in performance is the composition of mortgages due to the dramatic collapse of the mortgage refinancing market and the weakening of the mortgage buying market, which is suffering from shortages of home inventories and increasing affordability issues. It reflects strong pressure on the First Guaranty. ” ..

First Guaranty said he submitted it as a “right and responsible path” to protect the business while exploring restructuring options. He maintained some of the staff and managed his daily work.

Lenders are working to accommodate borrowers who have started the lending process but have not yet completed it. Closed mortgages have already been processed by a third party.

Assets and liabilities each exceed $ 500 million and are estimated at up to $ 1 billion, according to the company. Its largest unsecured creditor is Customers Bank, which borrows $ 25 million.

Some of the dismissed employees were working remotely from outside the state, according to a notice filed by the company with the Texas Labor Relations Commission. The company said it is in the process of paying salaries, vacations, and commissions that have expired, and paying severance pay to eligible employees.

First Guaranty Mortgage Corp. was founded in 1987. According to the company’s website, it acquired Charlotte-based Goodmortgage.com in 2016 and relocated its headquarters to Plano in 2019.

Other home lenders are cutting headcount significantly in response to declining demand for mortgages, especially in the refinancing business. JPMorgan Chase & Co. Dismissed more than 1,000 employees last week, and Wells Fargo also dismissed and relocated mortgage employees. Bloomberg News report.. Other real estate companies such as Redfin and Compass have also recently cut employment due to the slowdown in the national housing market.

Nationwide, refinancing applications have fallen by 80% and purchase loans have fallen by 20% from last year. Mortgage Bankers Association.

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