Embattled mortgage firm Hometown Lenders filed for Chapter 11 chapter safety Monday, revealing money owed of at the least $40 million to events together with lenders and distributors.
CEO Billy Taylor in a case submitting blamed his agency’s downfall on rising interest rates that decimated borrower and investor demand for residence loans. Hometown’s income fell by 70% in recent times because it laid off workers and shuttered branches. It shut down enterprise operations final October.
“Despite making these cuts, nonetheless, the Debtor was unable to beat the unexpected adversarial market circumstances within the mortgage lending trade,” wrote Taylor in a declaration to the U.S. Bankruptcy Court for the Northern District of Alabama.
The enterprise, which additionally operated below the first Family Mortgage model, stated in its Chapter 11 submitting that it had funds obtainable for distribution to unsecured collectors. It lists between 100 to 199 collectors, and each estimated property and estimated liabilities between $10 million to $50 million. Flagstar Bank holds the biggest unsecured declare, a $20.1 million sum stemming from a lawsuit over Hometown’s alleged default on a warehouse line of credit score.
Two former Hometown managers have unsecured claims of $5 million and $3.5 million, whereas a father-son duo are owed a mixed $1.25 million for their propping up of an Illinois workplace. Branch managers a yr in the past instructed National Mortgage News they have been paying lease and utilities to cowl for the then retail lender’s struggles.
Other vital money owed embody $3.5 million to warehouse lender First Horizon Bank, $3.4 million to Freddie Mac and $943,000 to the Internal Revenue Service. The defunct store owes six-digit money owed to outstanding trade distributors, and $300,000 and $250,000 sums to ESPN and the PGA Tour, respectively.
The firm, organized in 2000, grew to be the biggest mortgage banker in Alabama earlier than spreading nationwide by the point of the refinance growth in 2021. At its peak, Hometown counted over 1,400 employees throughout 120 places of work, and 1,500 mortgage closings per thirty days within the first quarter of 2022.
Hometown faltered together with the trade and ultimately closed lower than 100 loans per thirty days in June 2023. At that point, it had fewer than 400 workers throughout 40 places of work. Days earlier than its full shutdown, Hometown introduced a transition from a retail to dealer mannequin.
Besides missed tax funds, a number of states beforehand revoked Hometown’s origination licenses for failing to pay mortgage insurance coverage premiums on government-insured residence loans. Employees instructed National Mortgage News of chaos on the firm final June, alleging lacking cash in deferred compensation counts, lacking 401K matches and unfunded medical health insurance amongst different points.
An legal professional who filed the petition on behalf of Hometown did not return a request for remark Tuesday afternoon.
Taylor is the lender’s sole shareholder. A standing listening to within the chapter is scheduled for Wednesday morning in an Alabama federal court docket, whereas collectors are scheduled to satisfy July 9.
