Sunshine & Madison Mortgage Corp - Retail, Wholesale

Update - 2009-01-30: The Atlanta Business Journal reported 62 originators and support staff formerly with Sunshine Mortgage Corp offices in Smyrna, Alpharetta and Buckhead were picked up by Fidelity Southern Corp., the holding company for Fidelity Bank in Atlanta.

"By moving quickly Fidelity Bank was able to help many former Sunshine Mortgage customers avoid losing their pending mortgages by providing the financing needed to close them," said Palmer Proctor, president of Fidelity Bank, in a news release.

Update - 2009-01-21: The Atlanta Journal-Constitution ran an article on 2009-01-19 advising homeowners with mortgages being serviced by Sunshine Mortgage Corp. how to manage their payments in the aftermath of the company's closure. The author wrote, "So far, Sunshine Mortgage hasn't notified its customers -- which include this reporter -- what its closure means for future payments on the mortgages it services and the company's handling of escrows."

We believe the U.S. Bank warehouse line of credit was actually frozen at Sunshine's request, and reports from former employees indicate the company had been quietly positioning to shut down at year's end. CEO Edward Terry is also shopping Toll Brothers to buy Brentwood Homes, a North Carolina builder he owns, according to a 2009-01-09 report in the Atlanta Journal-Constitution. That article quoted an email sent by Terry to employees in October of 2008:

"I started with two people [in 1973] and today employ 220 people. During these 35 years, I have experienced several bad economic downturns and have never missed a payroll. Your jobs are safe."

Several sources have suggested that losses from the builder business were absorbed by Sunshine Mortgage Corp., ultimately leading to its demise.

Update - 2009-01-08, 5:40 PST: The Atlanta Business Journal is reporting that Sunshine Mortgage Corp. was "pursuing possible buyers, after the company failed to renew its warehouse line of credit with its bank." Local competitor Opteum Mortgage, a wholly-owned subsidiary of Prospect Mortgage Co., was reported to be "in discussions to acquire part or all of Sunshine Mortgage's operations despite the closure," as noted in the article.

There's video of employees emptying their offices here and WSBTV Atlanta gives great background on Sunshine, and asks some important questions, including WHY?

Sources we spoke with indicated U.S. Bank was the warehouse lender providing Sunshine Mortgage and Madison Mortgage with their funding capacity. In phone calls to Branch Managers, Chairman Edward (Ted) Terry said there was "no capital to fund or make payroll and the company will be shut down," according to our sources. Managers were told this includes all commissions due for December closings which quite possibly represents a record month. Over 200 employees were affected by the sudden closure. Many were counting on this income to keep their own homes, and their own Branches alive.

There is more to this story, and we will continue to search for answers. We spoke with (former, he resigned) President Fred Powell and he insisted that a rumor Ted had been arrested was false. Ted has not returned our call or responded to our request for an interview. At this time the company has not issued a statement to the public they have closed down.

In our search of public records, we came across an adversary bankruptcy proceeding that referenced Madison Mortgage Corp and Gary Rhineheart in connection with the sale and transfer of 10% of the shares of stock in Madison for $1.6 million. Gary hasn't been connected to the company for a while according to sources. His answer to the complaint was filed on 2009-01-06.

Many are still looking for the reasons for this unexpected shutdown. We're looking at eBank Mortgage LLC and Brentwood Homes as possible reasons to shutter what once was a major player, with record setting current volumes, now reduced to just another number on the Implode-O-Meter.

Original Listing - 2009-01-08: According to numerous tips and employees we've spoken with, Sunshine Mortgage Corp. and its wholesale sister-company Madison Mortgage Corp. have shut down effective 2009-01-07. "Everyone is in a state of shock," one person told us. An official announcement has not yet been sent out. Employees were given verbal notice.

Based in Smyrna, GA, Sunshine Mortgage Corp had 19 branch offices in the southeast. The company averaged over $55 million per month in 2007. Located in the same building next to Sunshine's corporate office, Madison Mortgage Corp. had 16 - 17 employees and had averaged $6.5 million per month in originations for 2007. According to one source, wholesale funded $40 million in December 2008, marking the end of the best quarter they've seen in a couple years. One broker told us they were informed "loans currently locked will not fund." Another sent this comment:

"I was just told that [Edward] Terry decided he didn't want to be in the real estate business any longer. No problem with the businesses. There are a lot of angry people. They probably will not even close their pipeline. DU findings have been released back to the brokers."

The situation is quite dynamic at this point, so stay tuned as we will continue to update with more information. Feel free to email us if you have more details.