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Nationstar Mortgage, the Dallas-based sub-prime home-lending unit acquired by Fortress Investment Group in July last year, stopped making loans through brokers on September 21 after foreclosures soared and loans declined industrywide.
Nationstar's wholesale-loan offices will honour applications already approved, and the company continues to service existing loans, the company said on its website.
Nationstar, formerly Centex Home Equity, was purchased last year by New York-based Fortress, a manager of private-equity and hedge funds, for about US$554 million ($747 million) in cash. It had been owned by Dallas-based Centex, the fourth-biggest US homebuilder.
"We have made the decision to stop all wholesale originations," the website said, but gave no reason for the change.
More than 110 home-mortgage companies have stopped making loans or closed since the start of last year as the worst US housing slump in 16 years raised late mortgage payments and foreclosures.
The volume of mortgages made to borrowers with poor or nonexistent credit histories fell two-thirds in the second quarter to US$56 billion industrywide, according to National Mortgage News.
Lilly Donohue, a spokeswoman for Fortress, didn't return a call and email seeking comment.
Nationstar said on March 1 that it was the eighth-largest US retail lender of sub-prime mortgages.
It services a US$10.5 billion loan portfolio in Dallas and is licensed to make loans in 47 states through 70 retail branches and telephone-service centers in Dallas, Phoenix, Denver and Cincinnati.
The company's four wholesale loan-service centers are located in Laguna Hills, California; Dallas; Milford, Connecticut; and West Palm Beach, Florida.
Centex sold its former Centex Home Equity unit to focus on homebuilding, the company said in March last year when the transaction was announced.
The sub-prime lending unit generated operating earnings of US$96 million on sales of US$617 million during the final nine months of 2005 when it was part of Centex, according to Centex filings.
"They had great timing with the sale," Stephen East, a homebuilding and construction-products analyst with Pali Capital in St. Charles, Missouri.
Nationstar bought the loan-origination platform of Parsippany, New Jersey-based Champion Mortgage from Cleveland-based bank KeyCorp in March.
But the terms weren't disclosed. The deal, announced in December, included more than 250 Champion employees and four call centers, a Nationstar statement in March said.
The transaction didn't include Champion's US$2 billion loan portfolio, which was sold separately to HSBC Holdings, Europe's biggest bank by market value.
- Bloomberg
