Current news for this company:
1st Metropolitan Mortgage - Net Branch Operation
Update - 2009-05-06: In a memo to 1st Metropolitan employees on 2009-05-05, President Daniel H. Jacobs announced the company was being "folded in" with Mirad Financial Group in a deal with Hestia Financial of Dallas, TX to become a mortgage banker:
"Hestia Financial is a boutique investment firm out of Dallas, TX headed up by Patrick McGeeney as Chariman, President and CEO. Bob Currier is Hestia's CFO. Hestia recently acquired Mirad Financial Group, a nearly dormant California-based FHA Full Eagle lender primarily to acquire the FHA Full Eagle status as well as warehouse line relationships. Through Hestia's new Mirad subsidiary 1MM is being folded in."
The memo goes on to state that the 1st Metropolitan Mortgage would be changing its name in several months "to launch a new brand to really separate our identity from a pure broker and establish ourselves as bankers." Employees will be given additional details in a conference call scheduled for 1 PM EST on Friday, 2009-05-08.
Update - 2009-04-06: It's been just over four months now since 1st Metropolitan Mortgage shut down a large number of its net branches. We're beginning to hear those branches were still owed monies that have not been paid. One former branch manager writes:
"I was told that there was no funds left to pay branches that were let go. They are using every excuse possible to extend the pay out date that has come and gone! March 15th 2009."
And one poster on our Discussion Forums had this to contribute:
"I am beginning to think 1st Met is going under. First they claim that someone stole some money from its corporate bank accounts and they were not cutting payroll checks. Now they are taking their own sweet time in returning branch managers money to them from their reserve accounts. Initially they said the funds would be returned on 3/15/2009 now they are saying it will be 3/31/2009."
Another ex-1st Metropolitan branch manager sent us this:
To-date, the former managers we've spoken with indicate there has been no money, correspondence or other communication forthcoming from the corporate office in Charlotte, NC.
The lawsuit filed by Flagstar Bank, FSB in August of last year was resolved when a judgment for $1,004,277.10 was entered against Empire Equity Group dba 1st Metropolitan Mortgage on 2009-01-30. Public records indicate the judgment was satisfied on 2009-03-02. Two subsequent (but unrelated) lawsuits were filed on 2009-03-12 and 2009-03-13 and are now pending against Empire Equity Group. Both contain allegations of fraud, misrepresentation and other violations. The earlier of the two cases was filed by an individual who was offered employment with Empire Equity Group and worked there for a short time following the alleged illegal acts. The latter relates to a contested foreclosure in CA.
We have yet to see any legal actions on behalf of the former branches or their employees, but one has to wonder what could be in the works considering what could be a substantial amount of money held in limbo.
Original Posting - 2008-12-31: Tips have been coming in that Charlotte, NC based Empire Equity Group, which operates under the dba 1st Metropolitan Mortgage, has announced it will immediately close "up to 80% of its offices" and discontinue originations from those locations. A memo giving just one day's notice was sent out late afternoon on December 30, 2008 to affected branches... from the memo:
"While we certainly appreciate and value our relationship, the economics of supporting your branch can no longer be justified and we are closing the branch location you manage effective January 1, 2009."
1st Metropolitan Mortgage was listed as the #2 Top Broker for 2007 in the June 2008 issue of Broker Magazine, with originations of $2.4 billion. Several persons we spoke with indicated they were under the understanding that the company was becoming a correspondent lender with an unknown bank, and certain offices were being closed due to small size and/or low volume. From one email we received:
One source we spoke with believed they were shutting down and may file bankruptcy, saying "they expensed it into the ground." If expenses are a factor, ongoing litigation is undoubtedly adding to the bill.
On 2008-03-27 Flagstar Bank filed a lawsuit against Empire Equity Group dba 1st Metropolitan Mortgage along with Chicago Title Insurance Co. for the repurchase of two loans totalling $1,086,786.60 plus costs on the grounds that they "contained false and erroneous statements and information, and constituted fraudulent transactions." The loans were originated by then-Empire Equity Group Branch Manager Joseph Kohen to one Pearl Dwek. If the names "Kohen" and "Dwek" sound familiar, it's because they've made news before.
From a 2007-03-21 press release, the Asbury Park Press reported Joseph Kohen plead guilty to bank fraud "saying he helped Dwek defraud PNC Bank of more than $20 million." Real estate mogul Solomon Dwek was also charged. In their series coverage of the ongoing story, Asbury Park Press asks "Was Wife A Straw Buyer?" Flagstar Bank alleges just that, citing in one instance that "the property was never actually transferred from its owner to Dwek," and in the other that "Dwek had simultaneously taken another mortgage loan from another mortgage lender." In both instances, Flagstar stated "it did not have a valid first mortgage lien on the property." In a 2008-11-19 filing, Flagstar requested the Court to compel discovery and "(1) enter a default judgment against Empire; (2) prohibit Empire from opposing Flagstar's claims and from supporting its affirmative defenses; (3) prohibit Empire from introducing any such withheld material in evidence; (4) find Empire to be in contempt of Court; and/or (5) award Flagstar its costs and attorney fees." Empire Equity Group subsequently filed in protest on 2008-12-02. The matter is still pending.
Additional details are still forthcoming. Contact us if you can contribute, or post your comments below.
mortgagepro2008 at 16:25 2009-01-02 said:They just posted the Vegas odds....the over/under on this company going out of business is 4-1-2009. If anyone is buying the whole, "we are going to be a federally chartered bank, but we don't know who with yet" you are not seeing the whole picture or are under a rock. Look at how many companies on this list that WANTED to be a Bank, but I have news for these people it is not that easy anymore. Furthermore, if there is any pending litigation that is almost a guarantee that you are not going to become a chartered bank or for that matter any type of bank. I hate to see anyone lose their job and I am sure there are a lot of good people at 1st Met, but honestly they are not going to make it. The days of wholesale brokered business coupled with net branch facilities that don't at least have 1 correspondent line are numbered. Get out while you can, becuase the end is near. Permalink
It’s the 80/20 rules of thumb. 80% of the production typically is performed by 20% of the whole.1st Metro was immune to the correspondent lending related loan buy-back catastrophes that plagued so many companies in the news of the last two years because of a strict no correspondent lending policy. That was part of the basis of our business model. I believe that mortgage fraud of all categories eclipsed the workability of this finely tuned mathematical model that has the same expensive buy-back penalties. I also believe that the new aggressive state legislative compliance audit expenses grew much larger and out of control because of the National Economic meltdown and media driven hyperbole. Probably reasonable but very difficult to plan for and predict. The lawsuit you’ve posted is chump change. It would not be unreasonable for there to be more of that yet unknown as of this date, all negotiable and all workable, especially with $150,000,000 per month in lower cost higher profit margin future originations.
The business model we all agreed with and signed onto just simply does not work anymore.This future business model change is a Harvard Business School taught method to expand and grow a future company that is agile, less expensive, more profitable and easier to manage and/or to purge non performing assets to identify and isolate maximum shareholder value for sale/or for merger with a highest bidder which in this case so far is an unidentified national bank. Not identified at this point for legal and strategic good business reason. I’d bet a dozen bidders were pining for this opportunity. 1st Metro’s CEO has a proven uncanny knack for these type transactions. You can be guaranteed the residual 1st Metro after this purge will be an ALL STAR staffed heavyweight contender. Direct Lending has huge national expansion more cohesive compliance benefits as long as underwriting guidelines are strictly adhered to and with solid qualified loan applicants. This management group will achieve that. I’ll take your bet 1st Metro will not only survive but also thrive after April 1st. Scott D. Permalink
NCMortgageFella at 18:02 2009-01-04 said:I was approved three months ago but just setup with 1MM Christmas week. The delay was due to family medical issue. I ordered a sign, business cards, and trifolds. I was dropped for lack of production. I received an email Friday evening from corporate instructing me that I could sign up with another branch and providing a form to do so but I have no idea what the entails or how to go about it since I only know two other people with branches. They are not sure of their status either. I am just looking for some guidance. Due to the family issue written about above I have been out of the mortgage loop for 18 months after a very strong ten year career as an LO. I was wanting to get back full speed and owning my own office I thought this was the ticket. I do not want to employ people right away as I need to get my feet under me first. I wish nothing but the best to 1MM. I like the people there but I do seem to get the impression that they are not really sure of what is going on and do not have a solid plan in place. Hope it works and maybe I will be along for the ride... Permalink
NCMortgageFella at 08:07 2009-01-05 said:Scott my wording of "own my own" branch is obviously not the correct terminology but I think the context is explanatory and yes I understand the ownership (or lack of) with 1MM. I think 1MM management has been aggressive in doing things the right away as far as compliance and fraud. Even with perfection in that area any company is still going to have defaults. Just the way it is right now. Permalink
There are more posts. Click here to view the whole thread
Note: Comments may take a few minutes to show up on this page. If you go to the forum thread, however, you can see them immediately.
Important: This company is on our list of lending operations that are apparently ailing or which we think are worth watching for any other reason. We make no representation or claim that any company on this list will or will not continue as a going concern, or change in any other way, adverse or beneficial. If you have concerns about this company, we suggest contacting them directly and/or checking with other reliable sources.