Update - 2008-06-04: Court okays Chapter 11 Plan:
"Fieldstone Mortgage Co., of Columbia, a mortgage originator that filed under Chapter 11 in November, received the blessing of the U.S. Bankruptcy Court in Baltimore on a disclosure statement amended May 30 explaining a Chapter 11 plan designed to pay unsecured creditors 3 percent on their $35 million in claims. Ontario, Canada-based Planet Financial Group LLC, the owner of a mortgage originator and a mortgage servicing operation, will purchase the business and all of Fieldstone's new stock for $1.2 million. The plan results in part from a settlement approved in April with Fieldstone's parent, Credit-Based Asset Servicing and Securitization LLC."
Update - 2008-01-18: In perhaps the final chapter in this long story Walter Buczynski, a vice president of the company, jumped to his death from a bridge today, shortly after his wife's body was found inside their New Jersey home.
The story as reported by AP says the company "now has fewer than 20 employees." Read the entire article here.
Update: 11-26-07: Under the headline, "C-Bass' Fieldstone Mortgage Unit Seeks Chapter 11 Shelter Amid Subprime Crisis" Biz.Yahoo.com reports the following:
"WASHINGTON (AP) -- A housing lender acquired nine months ago by Credit-Based Asset Servicing and Securitization LLC has sought bankruptcy protection, highlighting the growing toll of the subprime-mortgage crisis.
Fieldstone Mortgage Co., which originated $5.5 billion in mortgages last year, filed for Chapter 11 protection in U.S. Bankruptcy Court in Baltimore on Friday. The company said it has little cash to finance its operations and would be forced to shut down unless it's allowed to borrow $3.8 million from Credit-Based Asset Servicing and Securitization, or C-Bass.
"Without immediate access to a post-petition financing facility, the debtor will be unable to operate as a going concern," said Fieldstone, which didn't provide a detailed accounting of its assets and liabilities. The Columbia, Md.-based company said only that it had more than $100 million in liabilities and less than $100 million in assets."
Click here to read the entire article.
Update: 11-19-07: According to an announcement on their web site, Fieldstone Mortgage Company
of Columbia Maryland has closed their doors:
"Fieldstone Mortgage Company has ceased accepting loan applications and funding mortgage loans. We also have ceased accepting applications for broker approvals. We will continue to work with customers and brokers in providing them with information they have submitted to us during this difficult time."
One of our tipsters says, "I know Fieldstone Mortgage Company shut down it's subprime wholesale but they still had retail operations running in Frisco, Texas at the least. The Fieldstone Mortgage site now says this as of today."
According to HUD, Fieldstone closed over 1.2 billion dollars per month.
Looking at the Static Pool Data from their 2007 Securitizations sheet, over 80% and sometimes above 95% of their originations were 2/28 and 3/27 mortgages. Millions of dollars of these loans would have been turning into high interest adjustables this year, considering they accepted FICO's as low as 500 for some products. Please repost this link if it goes missing... we have archived a copy.
We are working on assessing the size of Fieldstone's Retail operations. If you can supply information about the number of employees affected or Retail peak loan volume, contact us and we can complete this entry.
Original implosion listing from 2007-07-17:
Originally put on the "imploded" list on July 17th due to the completion of their "firesale" acquisition by C-BASS, it has come to our attention that Fieldstone, under C-BASS, has significantly reduced their loan programs even with the support of C-BASS. The following was sent to us:
Dear Fieldstone Employee:
As you know, C-BASS LLC is an affiliate of MGIC Investment (NYSE:MTG) and Radian Group Inc. (NYSE:RDN). Yesterday, MGIC issued a press release highlighting the liquidity challenges C-BASS currently faces and indicated that MGIC and Radian may have to charge off their entire investment in C-BASS.
C-BASS is experiencing severe liquidity concerns at the present time due to the severe state of disruption in the over-all credit markets. However, C-BASS does not intend to go out of business. C-BASS remains a company with solid fundamentals, positive cash flow from operations and a strong loan portfolio.
Fieldstone intends to remain in the origination business. However, the severe disruptions of the credit markets will require that Fieldstone restructure its origination business in significant ways:
Fieldstone will continue to originate loans for customers of Litton Loan Servicing, LP in the operations center in Frisco, Texas: this includes the Retention
- Division and Retail Work-Out loans
- For the Wholesale and Retail Branch Divisions:
- NO LOANS WILL BE CLOSED FROM AUGUST 1, 2007 FORWARD, unless there was an unconditional commitment to fund issued July 31, 2007 or earlier, until further notice
- Fieldstone will fund closed loans still in the statutory recission period on August 1, and will fund loans for which documents were delivered to the title companies or closing agents prior to August 1
- Fieldstone will fund retail loans for which a written commitment was issued to the borrower prior to August 1, 2007
- Fieldstone will NOT fund wholesale loans for which conditional underwriting commitments or rate locks have been issued to the broker (unless the loan documents are already delivered or executed per the above)
- Detailed instructions on exactly which loans may be funded will be sent to the Operations Managers
- No further loan applications are to be accepted for Wholesale or Retail Branch customers
- No further underwriting approvals may be issued for Wholesale or Retail Branch customers
- Fieldstone will need to restructure the operations and personnel of Wholesale and Retail Branch Divisions: we will announce the scope of operations and the personnel that we will be able to maintain in these divisions over the next few days
- Fieldstone will continue in business as a smaller organization:
- We need to continue to work in the Wholesale and Retail Operations Centers to ship our funded loans
- We expect to maintain dedicated secondary marketing, systems and facilities, licensing and legal and accounting personnel in the Columbia, Maryland Home Office
- Normal benefits, 401(k) and other payments should be maintained for retained employees and
- Appropriate distributions and extension of benefits should also be made to any terminated employees
Fieldstone and C-BASS understand that this is a serious action and that it will upset many borrowers, brokers and referral sources: we simply do not have access at this point to the warehouse lines of credit necessary to continue those businesses. Please work with the borrowers, brokers and referral sources to find alternative sources of funding, and please send original files at the direction of our customers to another lender in order to facilitate the alternative funding.
C-BASS' senior management is actively involved in a search for additional sources of liquidity. They are investigating every opportunity available to us.
Please feel free to speak to the management team with any questions you may have. We will continue to keep you in the loop as we move through this process.
This is truly an extraordinary turn of events for Fieldstone: we all expected to create a powerful business by linking C-BASS, Litton and Fieldstone into an integrated enterprise. I appreciate your loyalty and support during this difficult period. One of Fieldstone's main strengths has been the commitment of the employees to work together to build our business, and you should all appreciate the value of what you have created and the contributions you have made.
We will be listening for any further tips that may elucidate upon Fieldstone's ongoing funding operations as well as those of its parent, C-BASS. Please keep us posted if you hear anything!
It appears that C-Bass' acquisition of Fieldstone Mortgage Company has finally been completed. On July 17th the following press release was published:
Credit-Based Asset Servicing and Securitization LLC (C-BASS) and Fieldstone Investment Corporation announced today that C-BASS has completed its acquisition of Fieldstone, a mortgage banking company that originates, sells and invests primarily in non-conforming single-family residential mortgage loans. In February 2007, C-BASS announced its intention to acquire Fieldstone, and Fieldstone's stockholders approved the merger in May 2007. Under the terms of the agreement, Fieldstone shareholders will receive $4.00 per share in cash. As a result of the transaction, Fieldstone will cease to be publicly traded and, accordingly, will no longer be listed on The NASDAQ Global Market.
C-BASS, based in New York, NY, is a leading issuer, servicer and investor specializing in credit-sensitive residential mortgage assets. C-BASS is a limited liability company capitalized by MGIC Investment Corporation , Radian Group Inc. , and C-BASS management. MGIC Investment Corporation, based in Milwaukee, WI is the parent of Mortgage Guaranty Insurance Corporation (MGIC), and Radian Group Inc., based in Philadelphia, PA is the parent of Radian Guaranty Inc.
Fieldstone Investment Corporation owns and manages a portfolio of non- conforming mortgage loans originated primarily by its mortgage origination subsidiary, Fieldstone Mortgage Company, and has elected to be a real estate investment trust for federal income tax purposes. Founded in 1995, Fieldstone Mortgage Company is a nationwide residential mortgage banking company that originates non-conforming and conforming residential mortgage loans through independent mortgage brokers and a network of retail branch offices located throughout the country. Fieldstone is headquartered in Columbia, Maryland.
Fieldstone's stock price had plummeted significantly prior to the acquisition (See this chart from Marketwatch) resulting in C-Bass purchasing Fieldstone at "firesale" prices. As such, we consider Fieldstone "imploded". We are adding this to the imploded list as a "back-add" since the acquisition process started some time ago (Today is July 23, 2007).
As we originally had reported Fieldstone on our Ailing and Watch list, below you'll find the original posts on Fieldstone:
Closing 7 of 16 operations centers. Covenants with lenders have been renegotiated through Jan 31, 2007; tangible net worth requirements have been lowered from $400 mln to $364 mln. How low can they go? Stay tuned.
Update, Feb. 12, 2007: Bought out by the C-Bass group.
Update, March 9, 2007: Maybe not.