Mortgage lender Celebrity Home Loans shut down its correspondent channel and laid off employees on Tuesday. Amid a market downturn, the company has decided to focus on the retail lending business.
“As one of the few retail lenders that saw production grow from Q1 to Q2, we’ve decided to keep our focus on our greatest strength: retail lending,” David Robnett, chairman and CEO, wrote in a statement. “Unfortunately, that meant the correspondent lending channel we were beta testing came to a close yesterday, affecting 10 of our team members.”
The executive said the correspondent production represents less than 0.1% of the overall volume in 2022 but declined to provide the total origination. Celebrity is “honoring all the locks in the pipeline, so no clients are disrupted,” Robnett wrote.
Part of the financial services holding company Celebrity Financial, the Illinois-based Celebrity Home Loans is licensed in 48 states and has reached $21 billion in home loans since 2006, according to its website.
With the strategy of acquiring mortgage companies, Celebrity reached 29 different brands. Midwest Equity Mortgage was the first company incorporated in 2018.
The closing of the correspondent channel affects mainly Cypress Mortgage Capital, the correspondent division for Celebrity that offered non-qualified mortgages, prime jumbos and reverse mortgages.
According to Robnett, the Cypress brand is specific to correspondent lending and limited to the 10 team members affected by the workforce reduction. He said the layoffs were in various positions and the company offered severance packages. The company did not provide additional details.
Since mortgage rates have doubled in one year and the market has become tighter, many lenders have started to focus on their more important channels – often at the expense of the divisions that are not productive.
Celebrity is the latest example. On Tuesday, California-based loanDepot, for instance, announced that it is exiting the wholesale business after a $223 million loss in the second quarter. In January, Chicago-based Guaranteed Rate decided to discontinue its third-party wholesale channel, Stearns Wholesale Lending, just one year after it acquired the multichannel lender.