ComUnity Lending - Wholesale Subprime, Alt-A

More than a few people saw this coming. We sent out the following in our Premium Newsletter a few days ago:

"Here's another update to ComUnity. The company has basically imploded. There is virtually no one left but the CEO and 4-5 others. If you search google, you will see the building for ComUnity has been sold and not by the CEO's choice. Rumors speculate that ComUnity cannot recover from the $19M in impaired loans and is not going to be able to 'come back'. It's very sad to learn this as it was a good company to work for. Word also speaks of a new venture the CEO is doing."

More:

"Rumor for the massive consolidation was that a 19M security the company was trying to do with a Wall Street firm fell throw at the last minute. Those 19M were loans the company could not sell."

And just in:

"I was just informed that the Liquidators were in their office this week and that their Managers and loan officers lost everything. One former Mgr that I know said he lost over $65,000."

"I don't think they have funded any loans in the last month or so. I just also learned the company will officially close down in the upcoming days. It is dead."

And finally, in an announcement from the company's web site:

"We have requested that all creditors prepare a concise description of any amounts(s) believed owing by the Company, together with relevant back-up documentation in support of the claim. The location to submit claim information is provided below, together with other contact information based on the nature of the inquiry.

If you are a creditor and you have not been contacted with a request that you submit a claim, please notify us per below and provide your address and other contact information so that you are included on future communications from ComUnity Lending."

Some of the pressure to seek what certainly appears to be Bankruptcy protection may be coming from former employee (Mai) Christina Pham, et al. We received word the amount of this claim may be as high as $1 million in what appears from this court action to be wage or benefits related.

Update 2007-09-25: We have received additional details from a source regarding ComUnity that we thought might be beneficial to readers. Per a source:

The lays off went far beyond the corporate office. The day the email went out they also shut down all the regional production sites (southern California, Oregon, Denver, Texas and I believe Florida) and as well eliminate the entire wholesale sales force. That move resulted in about 60+ AE's gone, not including all the staff at those production sites. Prior to the Aug 31st message, about 2 weeks before that they had cut the central support staff from 70 or so to about 40. With the Aug 31st notice, they let go of more to what they have now. The entire retail branch network was moved to another mortgage banker based in Colorado. They obviously had that move planned before making the announcement on the 31st. ...

Note: ComUnity is not to be confused with St Petersburg, Florida-based Community Lending Group.

(Back-add - today is 2007-09-20) We have received word that ComUnity Lending, a wholesale lender, (comunitylending.com) has throttled back operations per an announcement they made both via email and through their web site in early September.

To Our valued Customers and Employees -

It has been proven that in today's very disruptive market, volume is equal to risk. And that risk continues to escalate through guideline tightening, aggressive collateral review and due diligence processes that border on full QA audits. ComUnity Lending has decided to mitigate the risk of the market by reducing our volume and moving to the sidelines while we wait for sanity to return to the market. We plan on a short period of rest and re-structuring, after which we will re-enter the business aggressively. We are committed to this business and look forward to seeing our way through this turbulent time.

We will be retaining two production offices in California and a core group of dedicated staff at our Central Support office in Morgan Hill. Effective September 1, 2007, ComUnity Lending, Inc. will move all loans to these two offices and we will lock only through these two offices. We will be working with friendly competitors to find homes for our Retail offices and other production units.

It is our goal to close the loans currently in our system that meets existing guidelines. We will continue to accept new loans and locks through our two production units in California. We will be working to close all loans from our other locations by September 14, 2007.

For over a quarter of a century we have been lucky enough to work with the finest people in our industry. Together we built a culture that is vibrant and resilient. We will lean on that culture and that history to get us through this difficult market. Thank you all for being a part of this journey with us and we look forward to the future.

ComUnity Lending Leadership Team

One source indicated to us that around the end of August, ComUnity went from around 70 employees in their corporate office to roughly half at 35:

From what I understand we are still locking loans, but as our web site notes, we have severely cut our offices which we are funding out of.

Our corporate office is down to 35 employees ...

Before this particular layoff (Friday, August 31st) there were approximately 70 in the corporate office. This layoff was 1 of about 4 or 5 I've survived since last November.

The layoff before was just two weeks prior to this one.

If you can provide any further information, clarifications or corrections regarding ComUnity's continued operations, please let us know.