Lake Forest, Calif.-based Lenders Direct Capital Corporation is the lastest subprime operation to shut its doors, sources have confirmed to Housing Wire. CEO Michael McQuiggan cited the lack of investor demand for their loan products and the current state of the U.S. nonprime lending industry as factors in reaching the decision to cease wholesale originations. No word was given regarding loans already in the company’s pipeline. According to the Mortgage Bankers Association, LDCC originated 8,692 loans worth $1.23 billion during 2005, and ranked 197th on a list of the top 300 single-family home purchase loan originators. The company is the latest Merrill Lynch-associated operation to close up shop in recent weeks, as records obtained by Housing Wire show that LDCC operated under a master loan purchasing agreement with Merrill Lynch Mortgage Capital.
Industry rumors have been swirling for weeks regarding Merrill Lynch’s stance on funding future subprime orginations through third-party channels, with one source telling Housing Wire that Merrill Lynch is “closing off the subprime spigot,” while it simultaneously consolidates its future subprime fundings through its recently-acquired First Franklin unit. Merrill Lynch acquired First Franklin from National City Corporation earlier this year in a deal worth an estimated $1.3 billion. LDCC operated underwriting offices in its Lake Forest headquarters as well as in satellite offices in Frisco, TX and Bridgeville, PA. The company was licensed to lend in 30 states, including Arizona, California, Colorado, Connecticut, Florida, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Michigan, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Texas, Washington, Wisconsin, Wyoming and Virginia. LDDC made waves in the mortgage industry during its launch in 2003, when the company signed a marketing partnership with baseball slugger Reggie Jackson. The originator was one of the first to use sports marketing to drive consumer awareness of its products.
