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Accredited Home Lenders, Lone Star Funds - Wholesale, Retail - Agency, FHA

2008-05-04

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stories: reuters.com, signonsandiego.com

Update - 2009-05-04: Accredited Home Lenders filed Chapter 11 Bankruptcy on 2009-05-01. As reported by Reuters, the company "will wind down operations and is looking for a buyer of assets including its servicing business and properties owned through foreclosure."

According to theSanDiego Union Tribune there were "fewer than 100 employees, all in San Diego." With the BK filing, we are updating this listing to include Retail operations as well as Wholesale, which previously imploded in August of last year.

This entry is being listed separately from the previously imploded Accredited Home Lenders/Home Funds Direct due to the 2007-10-12 acquisition by Loan Star Funds.

Update - 2008-08-22: We received a copy of the official announcement of wholesale's closure late yesterday. In addition, we have learned that Retail has been consolidated to Dallas, TX. Retail employees in San Diego, CA and Cincinnati, OH were let go on almost no notice early yesterday. A dozen or so L.O.'s remain in Dallas. Several of the employees we spoke with said this all came down from Lone Star without warning. Rumors of a name change to "Caliber" were acknowledged but unconfirmed.

Update - 2008-08-21: Emails coming in report that Accredited laid off all wholesale Account Executives and most wholesale operations staff from their San Diego headquarters today. One source we spoke with said they will be concentrating on ramping up their retail operations nationally going forward. We don't know the exact number of employees affected at this time, other than "All but 15 people were just laid off," as a tipster mentioned. There is no official announcement on their web site.Contact us if you can provide more details. We'll update this as additional news comes in.

Update 2008-06-06: In an interesting, if not downright awkward turn of events, the implode of Bear Stearns Residential Mortgage (BSRM) has become indelibly linked to the listing that is Accredited Home Lenders.

Yesterday, Reuters confirmed the Loan Star takeover of BSRM as previously submitted by our tipsters:

Accredited, now wholly owned subsidiary of Loan Star Funds, has merged with BSRM under the Accredited name. It appears most of the Accredited folks were let go in the process. After the initial deluge of incoming tips about Accredited, we received a copy of the corporate memo that left their status in question. Then we got this from an email sent by an Accredited AE:

"Last Friday Lone Star Funds purchased Bear Residential (they offer Conforming and will shortly be adding FHA). Yesterday Lone Star shuttered 4 of the 5 Operation Centers for Accredited (San Diego is the surviving Operation Center). I continue to be your Subprime A/E which the expectation to be offering you a full product line consisting of Conforming, FHA and Subprime loans that are in the pipeline continue to be processed and new loans continue to be registered and approved."

Another tipster wrote:

"JPMorgan is selling off its Bear assets, the AUS went somewhere... their mtg lending unit is now AHL... i bet loan star put the screws to them and said you better start producing... so they went and bought Bear's business."

Several wrote to inquire if EMC (BSRM's servicing arm) was part of the deal. Matt Padilla with the OC Register had this:

"Details of the Bear-Lone Star deal are a bit sketchy but it appears Lone Star picked up what was left of the Irvine-based subprime lender Encore Credit, which Bear acquired last year. Bear Stearns, or better to say JP Morgan, still owns Lewisville, Texas-based EMC Mortgage Corp., a servicer and before the credit crunch also an originator of subprime loans. EMC has an office in Irvine."

Visit our Discussion Forum: Accredited can be found here. Bear Stearns Residential Mortgage can be found here.

Update - 2008-06-04: Announcements went out to brokers today that Accredited has closed their doors. One AE writes "I just heard that Lone Star who recently purchased us, Just shut down all 5 divisions." Click here for an official announcement. Although the memo makes this appear as a contraction back to HQ in San Diego, we have received dozens of emails stating this is a shutdown, and the San Diego office is the cleanup crew.

One broker sent us this description of the abrupt shut down:

"We just learned Accredited is closing their wholesale division (as we have a loan going to docs). What a mess. All we know is that our AE at Accredited emailed us saying they were closing their wholesale division. We called there and the lady that answered said they had 10 min to get their belonging and get out. We then called their corporate office and she couldn't confirm anything, but said "between you and me you better find another home for that loan.""

A forum thread dedicated exclusively to Accredited's what appears to be this 'final' closure can be found here.

Update - 2008-04-14: Word has reached us that they may implode again by month's end. One tipster wrote "Accredited was given a ultimatum by lone star that they had to hit 80 million in sales for the month of April or they will shut down the wholesale div..." From a former AE "The company has 30 days and it's wholesale division will be cut off." When we asked for clarification on what funded in March and what April's target was, the reply was "32 and 85." We get even more of the picture from an article on MoneyCentral:

"Accredited has originated about $86 million in non-prime loans since November, with $50 million of that in January, Accredited founder Jim Konrath said on Monday."

The rest of the "writing on the wall" is easy enough for all to see. On 2008-02-19, it was announced that Chairman and CEO James Konrath had retired, replaced by Jim Moran, Managing Director of Hudson Advisors. "Hudson Advisors has managed and serviced investments acquired by Lone Star Funds since 1995."

Other tips received in early March spoke of another round of mass layoffs. "March 4th, AHL had a large layoff due to current market conditions." One tipster said "Accredited still has 100 sales Reps / AE", but there's been no other news how many of the 1000 or so left after the previous round of layoffs may have been let go.

In this statement, taken from their 3rd Q 10-K, lending operations in Canada were cited as being another cause for concern:

"There can, however, be no assurance that our resumption of U.S, lending operations will be successful or that our other sources of income -- income derived from our servicing operations, our residual interests in previously securitized loans and our Canadian mortgage loan originations -- will be sufficient to fund our operations going forward."

The web site for Accredited Home Lenders Canada only gives the most basic contact info - there are no longer any links for brokers as were previously accessible, and we found this from 2008-01-29 on the blog site Canadian Mortgage Trends:

"According to a contact at the company, Accredited Home Lenders has ceased operations permanently in Canada. Apparently it was effective Friday and supposedly everyone has been laid off."

The Money Central article goes on to quote Konrath on their operations:

"The company, which produced as much as $2 billion a month during the housing boom, is also eyeing a return to the asset-backed securities market that remains frozen in the aftermath of soaring defaults on risky U.S. loans, he said.

To be sure, Konrath said he has not heard anything at the meeting of some 6,000 Wall Street dealers, financiers and investors that suggests he will be able to tap the market anytime soon."

It was just a matter of time, as BlownMortgage.com points out in an article entitled "Accredited Home Lenders - the kid that touched the stove again". A former AE told us "...they are on there last string, Lone Star does wants to pull the plug, they just have so much egg on there face."

Lone Star Funds V, a private equity investment firm, acquired Accredited on 2007-10-12.


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Comments:

shark at 15:42 2009-05-04 said:
I thought they had already gone belly-up like all the other sub-prime lenders, but they were still duking it out and trying to stay solvent. Unfortunately, there is absolutely no secondary market for these types of loans, so they basically have no product to sell. FHA is the only sub-prime game in town now, until they fail. :roll: Permalink
Rexx at 14:42 2009-05-06 said:
I put one loan thru Accreditied. It was a total nighmare. after that mess, I said I would never use them again. These Underwriters do it to themselves and their companies. They put stupid conditions on good loans. Thus , pissing the clients and brokers off so they don't get used again. When a lender makes the Broker look unprofessional, it doesn't work. Whats funny the underwriters, and management team will just get recycled to a new start up company. That company will close its doors too. CEO's don't just hire the first person that comes to the door. actually interview them. get a Broker review going. Some wholesale people should just be selling cars. woops, they are closing down too. My bad. I have been in the business for over 10 years and have seen so many wholesalers come and go. You can tell if someone is going to survive by the first loan you put through them. I think the next wholesaler to go will be Wellsfargo. Their underwriting is a total nightmare right now. The wholesale management is running around right now with their head in the ground and their tails between their legs. They have been closing 300 loans a day. This sorta really sucks considering the country has sooo many states and trillions of dollars worth of business. Everything is automated too. How bad is that.When the president of Wellsfargo goes on to Bloomburg and says we took in 190 billion worth of loans and closed 110 billion. that is really bad. Permalink

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Important: This company is on our list of lending operations that have "imploded". However, please note that "imploded" is a somewhat subjective and does not necessarily mean operations are ceased permanently: it can mean bankruptcy filing, temporary but open-ended halting of major operations, or "firesale" acquisition. All information here is provisional, and may contain inaccuracies (especially newer information). If you are planning on doing business with this company or any other one listed on this site, you should inquire with them directly on whether they can still meet your needs. Many are still operating in some capacity.