Winstar Mortgage - Wholesale Alt-A

We have received a few reports regarding Winstar Mortgage Partners. Tips we have recieved indicate that Winstar ceased operating independently and has now combined with American Sterling. Regarding Winstar's closure, the following notice was allegedly sent out:

It is with great sadness that ... I announce that as of today, WinStar has ceased operations. As you are all aware, there have been many mortgage companies closing or merging in response to the losses which occur when borrowers don't make their payments. The easy credit that has been offered for the last several years allowed borrowers to extend themselves beyond their financial capacity. Also, there has been an unprecedented amount of fraud committed by borrowers, often with the help of their mortgage providers, as evidenced by miss-stating income, assets, home values, and occupancy intentions. The losses for mortgage companies caused by nonperforming loans is staggering and ultimately became too much for WinStar to continue operating. While a buyer for WinStar could not be found, the management team has worked diligently to arrange for a bank to take over the sales and secondary WinStar groups in an effort to save as many jobs as possible.

Further to the above, you can find notice on Winstar's website (winstarpartners.com) regarding their combination with American Sterling:

American Sterling Bank is pleased to announce that it has combined the regional production offices of WinStar Mortgage Partners, Inc into its existing mortgage operations. This effort solidifies American Sterling's commitment to consistently seek out new opportunities to provide the best products and services to its customers. Please see the information below for more information regarding the change. WinStar has truly appreciated your business in the past and our combined companies look forward to continue serving you and your borrowers in the future.

An informant elaborated on the size of WinStar's operations as follows:

At the peak of production monthly volume was $125 million+. They were actually listed by National Mortgage News as a top 25 Alt-A lender at the end of calendar year 2004 with well over a billion dollars in volume. I would also say at the peak there was close to 75 employees.

I can not comment on recent monthly volume or product mix, but within the past six months they were shedding products. It started with the high risk Alt-A (100%), then they stopped offering the Option ARM product, and last week they sent out an announcement they were no longer offering Alt-A. ...

We have also been informed that Summit Mortgage was the parent company of WinStar. From what we can discern, Summit is continuing to operate.