Over the last few weeks, I read several articles talking about the recent pickup in mortgage companies hiring new Loan Officers and Processors. One of the articles mentioned in my local paper the OC Register, discussed how the CEO’s of the mentioned companies are scaling up staff based on pending FHA loan limit increases and low interest rates. While I am very happy to see jobs trickling back into the industry – I am concerned about another recent flurry of companies shutting down operations and starting back up under new names.
Have you heard about a mortgage company shutting down and opening up with a new name, within a few days? I have.
Why are mortgage companies reinventing themselves? Are these companies under strain and restructuring partnerships? Or are the corporate boards going shutting down operations? Several CEOs that I spoke with indicated the mortgage companies were rebranding due to bills owed to vendors and the inability or lack of desire to pay.
Last year the personal bankruptcy laws changed to make it more difficult for people to declare personal bankruptcy. When declaring bankruptcy, you have to declare all assets and reviews are done, to ensure you cannot pay SOME or ALL of the monies you owe. It’s much different than the old days when almost anyone could easily wipe clean their slate of debt.
I do not think mortgage brokers, and in some cases, bankers are under these same regulations. How many vendors have received calls from former clients who previously owed large sums on past due accounts? Seriously, chime in here, I have heard some pretty funny (unless you are the vendor) stories about clients that are seemingly in shock that they cannot restart their accounts back up.
What do you think the restrictions should be on changing a business name and restarting in the same industry, if significant monies are owed under the former business name?
Someone please explain to me why it should be any different for bankers and brokers versus an average American citizen?
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Hi Noel,
Good point. I think a portion of the mortgage licensing approval process involves thorough background checks that would bring up any questionable business moves like you describe. It’s probable that licenses are revoked and/or not granted if principals didn’t act within a high ethical standard.
David
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I agree that business practices are looked into, at Equity Direct I was responsible for all licensing for our 24 states. The issue becomes bills that are due vendors, there is not “Due diligence” done to vet out old bills owed software firms, lead vendors, etc. Most licensing requirements only look at minimum deposits held and P and I statements.
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Noel,
I agree with David’s assessment. While I have seen some people re-enter the market with new company names and new partnerships with net branching groups or banks who are backing existing call center like mortgage sales operations, I do not believe that the majority are those that are evading vendor debts. Even if some are working out debts with previous vendors while rekindling their business, this is fairly common in any business that goes through a down turn. The new branching group or bank is going to be unwilling to take on previous debts, but recognizes the value of an existing sales organization and infrastructure so the owner/operator is left with dealing with vendors of the previous organization personally. There is no doubt that there are bad fish out there who are wanting to avoid living up to their previous obligations, but if we can work together to support those that are trying to come back with integrity, we will all survive the storm.
Raj Parekh
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I am glad to have lead providers offering input and insight. I was hoping for some reaction on the vendor side about clients needing help starting back up, horror stories. I hear them more over the phone then I do on the site unfortunately.
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