EquiFirst - Nonprime, Alt A

Update - 2008-04-23: After receiving this tip, we called an inside source to confirm:

"EquiFirst has suspended all subprime lending. They are going to concentrate on rolling out FHA products when they haven't completed their required test files as of yet. One "branch" in the company is the only one allowed to submit FHA loans while the rest of the company has a projected rollout date of May 15 (which has been postponed every month this year - we've heard since December that it will rollout the 15th of the next month)."

An attached memo effective 2008-04-22 announced "No new submissions will be accepted." Per our source, 9 states are in the test case phase for FHA, and between 150 - 160 remaining AE's are receiving a small guarantee as compensation while they await the nationwide FHA rollout.

Update - 2008-04-02: In emails sent to us today by several brokers, it appears Equifirst has eliminated their subprime products completely. One AE writes "We are true full doc only now. W2 pay stubs or full tax returns." Another explained to brokers "We have continued to offer products that disappeared months ago for our competitors including bank statements, stated, and full doc with 1099 only.

Barclays, who owns EquiFirst, made the decision to portfolio these loans thereby enabling EquiFirst to continue to offer these products. But as more lenders pulled out of the products it left EquiFirst in a situation where risk outweighed the ability to continue portfolioing. So the day has come when they are no longer available." AEs were notified of the changes in a late day company-wide conference call on 2008-03-31.

Update - 2008-01-05: Sent in today by a reader:

"Just an update, EF laid off over 400 employees in August 2007 and as of Friday had many positions work sent to the corporate office leaving no work to be done in the phoenix branch. As of Monday, phoenix branch office is to allegedly be eliminated while all of Charlotte will take over its work flow."

Original Posting - 2007-04-02: Another back-add (2007-06-07), a reader submitted to us that EquiFirst should be added to our list of "imploded" companies as it was acquired on April 2, 2007, by Barclays Bank. The reader noted:

I am curious to know why Equifirst is not on your list of Imploded lenders? They were sold to Barclays after losing 48 million in the 4th Q 06 and 39 million in the 1Q of 07. Barclays originally announced an acquisition of $225 million and reduced the purchase price to $76 million at the closing table on April 1.

In addition, voluntary buy-outs/severances are now taking place as the management says that they are now "over capacity".

As we have noted, "imploded" companies include those that are bought out in a "firesale" transaction. As a 66% decrease in offer price would seem to qualify as a "firesale" purchase, we are adding EquiFirst to our list as the Barclays acquisition was completed on April 2, 2007.