Merit-less Mortgage Operations
Props to S Crow for pointing out the demise of yet another local mortgage company: Merit.
Kirkland-based mortgage company Merit Financial will meet with its 300 employees this morning to let most of them go as executives decide whether to file for bankruptcy, according to two people familiar with the company's plans.Hey at least there's always Senor Cartgage Mortgage. But don't worry your little head about the steady collapse of the mortgage lending industry in our back yard... real estate in Seattle is H-O-T HOT. Get in while you still can, before you get priced out forever!
Merit Financial will keep a skeleton staff to process loans in progress, but otherwise will be working to liquidate the company, said the sources.
Merit was founded in 2001, making residential loans during a hot real-estate market. It grew quickly from a company with 12 employees and $50 million in loan volume its first year to passing the $2 billion mark in cumulative loans last May, after just four years in business, according to the company's Web site. At that time, it had 430 employees and planned to hire more.
Like others in the mortgage business, Merit fell on hard times as the refinancing market dried up. Six months ago, it laid off about 20 people in its lending division and stopped making loans itself, acting only as a broker.
(Melissa Allison, Seattle Times, 05.04.2006)
11 comments:
good fodder for this blog--national data for the most part but fun nonetheless. multiple articles connected, links at end of each page.
http://money.cnn.com/2006/05/03/news/economy/realestateguide_fortune/index.htm?cnn=yes
bad link
http://tinyurl.com/s2cp7
"Let me point out that we are not hoping that the market cools drastically..."
Speak for yourself. I want the market to tank, because I've been conservative with my money, and other people's rampant speculation has a real impact on my ability to live.
That said, I wish our economy as a whole weren't so dependent on real estate, but I don't see any way to get back to long-term economic fundamentals that won't hurt in the short term. Bubbles suck.
"Real estate is a good LONG TERM proposition."
Real estate is a mediocre long-term investment. The historic rate of return on single-family housing is lackluster (compare annualized median home appreciation from 1970-present with stock market index appreciation over the same period. You'll be surprised), and if you're dumb enough to get into multi-family housing, you'll face huge costs of business, with high risk.
Live in a house. Invest in the stock market. Historic trends are rarely wrong.
Case in point:
In the Long Run, Sleep at Home and Invest in the Stock Market
As someone who has saved scrupulously and allowed this bubble to blow right by me, I have to agree with Anon 3:06.
A lot of pain has been caused by this "irrational exhuberance". Gutting the American economy long term for short term greed, for one thing.
Scared idiots pushing the price of houses into the stratosphere for another, while fiscally sensible people stood by in amazement.
It's been sick as sick can be. The sooner it's corrected, the better.
While I won't be gleeful that people are getting hurt by the downturn, there is no alternative.
The only alternative would have been for it to go on FOREVER and THAT is clearly not possible.
I also believe that, for about the past year now, there's been plenty of warning on what was coming down the pike.
If people chose to ignore that info. then that is their own resposibilty.
I'd just like to point out that a lack of refi business in no way necessarily implies a weak real estate market.
Does anyone else notice that all of the local radio advertising is mortgage companies?
KVI, KTTH, 105.3FM...
All they advertise are mortgage companies.
There is one with a really annoying phone number jingle...the one with the guy that won't "stick-it-to-ya."...the one where it should be easier than ordering a pizza...
I know I am certifiable, but this is just another example of the REIC imploding.
Speaking of loans, is there anyone here who is acquainted with these "first time buyer" classes that have been held in Seattle since the bubble started?
In 96 or 97, pre-bubble, I was lookng for property and no realtor ever mentioned the classes.
But at some point, they became part and parcel of buying a home in Seattle, right?
I knew 4 people who went to these classes. All of them felt they were basically designed to squeeze a person into more house than they could afford.
Does anybody here know the deal with these "classes"?
Who sponsors them? Are they really required for first time buyers? Is it a law or something?
As far as I know, seattle is the only place that does this.
S Crow? Tim? Anybody?
Well I just read that Merit's CFO said that he expects the employees who were laid off to start a new mortgage business similar to Merit.
That's like jumping from the frying pan into the fire I would say.
I find it funny that Merit was doing 95% of thier business in refinancing. Man, talk about a non diversified company. Did these guy's not foresee this? Seriously.
http://seattletimes.nwsource.com/html/businesstechnology/2002973118_merit05.html
oops my link didn't post correctly
http://seattletimes.nwsource.com/html/businesstechnology/2002973118_merit05.html
ok i give up just go the seattle times and look under the business/tech section and you'll see the new story.
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