Another One Bites the Dust
Pro30 Funding of Novato joins the ranks of other Marin mortgage companies that have imploded and have been forced to lay off personnel due to this so-called "subprime meltdown" that is supposedly not affecting Marin:
A Novato mortgage company has laid off nearly all its employees, becoming the third Marin brokerage in just over a month to issue pink slips.So "99%" of Pro30's clientele had "good credit" and yet they still had to close shop. I'm shocked, really. I mean, we all know that only les miserables have to resort to shaky loans, lying about their income, etc. to squeeze into a house and that the ever so responsible Alt-A crowd is safe. But what if it's not so?
While the mortgage industry has been buffeted by defaults nationwide - particular in the "subprime" sector that caters to borrowers with weaker credit scores - Pro30 founder Bill Coleman said 99 percent of his clients had good credit records.
In many cases, he said, borrowers were defaulting on the loans without making a single payment - perhaps so they could live without housing expenses for six to nine months during the foreclosure process.
"The appreciation started to decline, and people looked at their payments and said they're not going to make money," Coleman speculated. "We ran a great shop. We had great employees. It wasn't a business issue; it was the fact that the industry turned upside down almost overnight."
The closure of Pro30 Funding follows 36 layoffs this month at Paul Financial LLC, a San Rafael-based mortgage company that had 180 full-time workers San Rafael, Santa Rosa and Irvine. Twenty-five of the layoffs were at the San Rafael office.
Late last month, Novato-based GreenPoint Mortgage laid off 70 employees, nine of whom worked out of the company's headquarters. GreenPoint employs approximately 2,800 people, including 560 in Marin.
Paul Financial and GreenPoint said they are not subprime lenders, but felt the residual effects of nationwide problems in the subprime mortgage industry.
- The recent troubles in the world of mortgage finance have not been completely contained to subprime despite what the Powers That Be want you to believe.
- Marin's economy is also being affected by the mortgage crisis.
* * *Update 6-2-2007: I forgot to include this one (emphasis mine):
San Rafael mortgage broker Paul Financial let go of 36 employees this month. Peter Paul, president of Paul Financial, said the company won’t make money this quarter given the drop-off in lending and the decision to set aside reserves for loans that might go bad down the road.Looser lending in Alt-A? I thought that was supposed to be safe and was going to save the housing market.
Paul said the layoffs were due in part to his zigging while the industry zagged. Last fall he revved up in anticipation of more growth. That was shortly before the implosion of the subprime mortgage industry, which lends to those with tarnished credit records. Looser lending in the Alt A and other [as in not subprime?] segments of the mortgage market is now taking its toll.
"Some lenders were really making Alt B loans," Paul joked.