Careers vanish after subprime 'free fall'
Kent and Mysti Cope were well-paid executives at subprime lenders who never thought the industry could disappear overnight. Now they're just trying to get by.
SAN CLEMENTE, Calif. (CNNMoney.com) -- Kent and Mysti Cope met and fell in love working for one of the nation's top subprime lenders. Now, their life has been turned upside down after the sudden implosion of the subprime mortgage industry.
Mysti was one of the last people out the door at New Century Financial, once the nation's No. 2 subprime lender. She had been in charge of e-commerce customer service with dozens of employees reporting to her. It was at New Century where the Copes met in 2000.
Kent worked for several of the firms that helped give birth to the industry, which specializes in making loans to people with less-than-perfect credit, in the 1990s. He has been out of work since August when he was laid off by Friedman, Billings, Ramsey Group (FBR) unit First NLC Financial Services.
"We're still both in shock that it could go from something so good to so bad so quick," said Kent, 59. "New Century in 60 days went from top of the heap to out of business."
The two didn't say exactly how much money they made at their last jobs but Kent admitted they each had six-figure incomes.
Today, they're trying to get by on his unemployment benefits of about $450 a week, which covers only about an eighth of the basic payments they owe every month.
Full article:
http://money.cnn.com/2008/03/31/news/economy/copes/index.htm?postversion=2008033105
Monday, March 31, 2008
Thursday, March 20, 2008
The Truth, The Whole Truth, Nothing But The Truth
Long time, no posts - I guess that's what happens when the entity you are writing about no longer exists!
Reader "Mr. Miracle" pasted this article from the March 14 Washington Post while commenting on a previous post - thought I'd share it with you. No wonder FBR liked Daddy and Junior's way of doing business...
FBR's Awful Truth
By Steven Pearlstein
There was a time when lots of us were rooting for Friedman, Billings, Ramsey, the homegrown investment bank. With its strong bench of analysts, its focus on financial services and technology, its scrappy trading desk and a loyal network of institutional investors eager to buy up whatever it was selling, FBR was the Washington upstart determined to beat Wall Street at its own game.
But in the decade since it began selling its shares to the public, FBR seems to have careened from one disaster to another, losing billions of dollars for its customers and investors and constantly restructuring itself to give the illusion of reinvention. One of the founders was forced to resign from the firm after a federal investigation into whether the company had given inside information about one of its customers to another. Its own stock is so beaten down -- from a high $28 four years ago to yesterday's close of $1.93 -- that investors are pricing it at less than the company's book value.
Sad as it is to say, I'm coming to the conclusion that FBR has come to represent everything that's bad about Wall Street, quick to jump on every fad, substitute hype for solid research and earn big fees for peddling junk.
Let us recall, for example, that FBR was an active financier and cheerleader for the tech and telecom boom of the late '90s, putting its customers' money and prestige behind dozens of flameouts that included LifeMinders, WebMethods and Varsity Books.
In between bubbles, it took the lead in funding a Bermuda reinsurance company that entered the market just in time to get buried under two of the worst hurricanes in history.
FBR became an underwriter for the residential real estate bubble, helping to finance New Century Financial, Luminent Mortgage Capital, Thornburg Mortgage and American Home Mortgage.
In 2005, FBR decided to jump into the subprime pool with both feet, paying more than $100 million to acquire originator First NLC and losing hundreds of millions of dollars more before taking the firm into bankruptcy earlier this year.
A financial whiz I know compiled for me a list of all the stock offerings FBR underwrote between 2001 and 2007, both public IPOs as well as the private placements in which FBR specialized. He found that if you'd invested in all of them on the day they started trading, you'd be down now by about 20 percent. That compares with a gain of 20 percent on the Standard and Poor's 500-stock index, or a loss of 9 percent on the S&P Financial index.
Of course, investment banking is only part of FBR's business -- and at this point, the only profitable part, although even that is now questionable, given the market turmoil and the dramatic slowdown in new issues. But it's worth noting that in the past two years, when other financial firms were posting record profits from proprietary trading (buying and selling securities with the firm's own money) and asset management (collecting fees for running hedge funds and mutual funds), FBR managed to lose money in both areas.
Not that it would have been easy for an investor -- or a business journalist -- to come up with a clear picture of what was going on at FBR. No sooner would something go wrong than a press release would appear announcing some new strategy or structure or the shift of assets from one pocket to another. One day FBR is an investment bank, the next a tax-free real estate investment trust with a taxable investment bank subsidiary. Then, when the REIT starts to crash, it spins off the investment bank as a separate entity, selling part to a private-equity firm and then, a few months later, another part to the public. This is the kind of hocus-pocus that financial sharpies engage in when they can't succeed by delivering good value to customers and investors. With FBR, it's a case of being too clever by half.
What's most galling, however, is how well FBR's top executives have done for themselves despite all the misjudgments and setbacks. One founder, Russ Ramsey, was clever enough to cash out and leave shortly after the initial public offering. And before the recent troubles, Manny Friedman and Eric Billings made themselves two of the highest-paid executives in the region, with annual compensation packages approaching $10 million each.
But for pure chutzpah, nothing tops the recent announcement that, following a year in which the company posted an operating loss of $740 million, Billings and three other top executives were awarded bonuses and stock grants worth $30 million, at the time equal to nearly 9 percent of FBR's market value. The rationale given by FBR's compensation committee is a model of twisted logic that now infects the minds of corporate directors. It noted that these executives had gone years -- yes, two entire years! -- without a bonus because of the company's poor performance due to a subprime mortgage crisis that was outside their control. And it lauded them for their great success in selling off the subprime assets for which they grossly overpaid, and for raising $220 million through the IPO of the investment banking subsidiary to investors who, in the space of eight months, have seen the value of their shares fall by two-thirds.
One can only imagine what bonuses the FBR directors would have lavished on Billings and his associates if they had sold stock that had actually increased in value.
But equally absurd was the rationale for granting Billings $2 million and an additional 3.5 million shares of FBR stock as a retention award, so he won't go leave the company over the next three years. This is the founder of the firm with his name on the door, who, with 6 percent of the common stock, is already the firm's largest individual shareholder. By his own admission, he bet the firm on residential real estate and subprime mortgages -- and lost. So where else is he going to go? Does anyone really believe that recruiters from Goldman Sachs are banging on his door?
Of course, the better question is why, rather than picking the pockets of beleaguered shareholders to pay big retention bonuses, FBR's directors haven't sent Billings packing. After all, that's what happened at Citigroup, Merrill, Morgan Stanley and Bear Stearns in the wake of similar misjudgments. At FBR, by contrast, not a single top executive has lost his job as a result of the mortgage debacle.
Reader "Mr. Miracle" pasted this article from the March 14 Washington Post while commenting on a previous post - thought I'd share it with you. No wonder FBR liked Daddy and Junior's way of doing business...
FBR's Awful Truth
By Steven Pearlstein
There was a time when lots of us were rooting for Friedman, Billings, Ramsey, the homegrown investment bank. With its strong bench of analysts, its focus on financial services and technology, its scrappy trading desk and a loyal network of institutional investors eager to buy up whatever it was selling, FBR was the Washington upstart determined to beat Wall Street at its own game.
But in the decade since it began selling its shares to the public, FBR seems to have careened from one disaster to another, losing billions of dollars for its customers and investors and constantly restructuring itself to give the illusion of reinvention. One of the founders was forced to resign from the firm after a federal investigation into whether the company had given inside information about one of its customers to another. Its own stock is so beaten down -- from a high $28 four years ago to yesterday's close of $1.93 -- that investors are pricing it at less than the company's book value.
Sad as it is to say, I'm coming to the conclusion that FBR has come to represent everything that's bad about Wall Street, quick to jump on every fad, substitute hype for solid research and earn big fees for peddling junk.
Let us recall, for example, that FBR was an active financier and cheerleader for the tech and telecom boom of the late '90s, putting its customers' money and prestige behind dozens of flameouts that included LifeMinders, WebMethods and Varsity Books.
In between bubbles, it took the lead in funding a Bermuda reinsurance company that entered the market just in time to get buried under two of the worst hurricanes in history.
FBR became an underwriter for the residential real estate bubble, helping to finance New Century Financial, Luminent Mortgage Capital, Thornburg Mortgage and American Home Mortgage.
In 2005, FBR decided to jump into the subprime pool with both feet, paying more than $100 million to acquire originator First NLC and losing hundreds of millions of dollars more before taking the firm into bankruptcy earlier this year.
A financial whiz I know compiled for me a list of all the stock offerings FBR underwrote between 2001 and 2007, both public IPOs as well as the private placements in which FBR specialized. He found that if you'd invested in all of them on the day they started trading, you'd be down now by about 20 percent. That compares with a gain of 20 percent on the Standard and Poor's 500-stock index, or a loss of 9 percent on the S&P Financial index.
Of course, investment banking is only part of FBR's business -- and at this point, the only profitable part, although even that is now questionable, given the market turmoil and the dramatic slowdown in new issues. But it's worth noting that in the past two years, when other financial firms were posting record profits from proprietary trading (buying and selling securities with the firm's own money) and asset management (collecting fees for running hedge funds and mutual funds), FBR managed to lose money in both areas.
Not that it would have been easy for an investor -- or a business journalist -- to come up with a clear picture of what was going on at FBR. No sooner would something go wrong than a press release would appear announcing some new strategy or structure or the shift of assets from one pocket to another. One day FBR is an investment bank, the next a tax-free real estate investment trust with a taxable investment bank subsidiary. Then, when the REIT starts to crash, it spins off the investment bank as a separate entity, selling part to a private-equity firm and then, a few months later, another part to the public. This is the kind of hocus-pocus that financial sharpies engage in when they can't succeed by delivering good value to customers and investors. With FBR, it's a case of being too clever by half.
What's most galling, however, is how well FBR's top executives have done for themselves despite all the misjudgments and setbacks. One founder, Russ Ramsey, was clever enough to cash out and leave shortly after the initial public offering. And before the recent troubles, Manny Friedman and Eric Billings made themselves two of the highest-paid executives in the region, with annual compensation packages approaching $10 million each.
But for pure chutzpah, nothing tops the recent announcement that, following a year in which the company posted an operating loss of $740 million, Billings and three other top executives were awarded bonuses and stock grants worth $30 million, at the time equal to nearly 9 percent of FBR's market value. The rationale given by FBR's compensation committee is a model of twisted logic that now infects the minds of corporate directors. It noted that these executives had gone years -- yes, two entire years! -- without a bonus because of the company's poor performance due to a subprime mortgage crisis that was outside their control. And it lauded them for their great success in selling off the subprime assets for which they grossly overpaid, and for raising $220 million through the IPO of the investment banking subsidiary to investors who, in the space of eight months, have seen the value of their shares fall by two-thirds.
One can only imagine what bonuses the FBR directors would have lavished on Billings and his associates if they had sold stock that had actually increased in value.
But equally absurd was the rationale for granting Billings $2 million and an additional 3.5 million shares of FBR stock as a retention award, so he won't go leave the company over the next three years. This is the founder of the firm with his name on the door, who, with 6 percent of the common stock, is already the firm's largest individual shareholder. By his own admission, he bet the firm on residential real estate and subprime mortgages -- and lost. So where else is he going to go? Does anyone really believe that recruiters from Goldman Sachs are banging on his door?
Of course, the better question is why, rather than picking the pockets of beleaguered shareholders to pay big retention bonuses, FBR's directors haven't sent Billings packing. After all, that's what happened at Citigroup, Merrill, Morgan Stanley and Bear Stearns in the wake of similar misjudgments. At FBR, by contrast, not a single top executive has lost his job as a result of the mortgage debacle.
Friday, February 29, 2008
Of Watches, Birthdays and Ungratefulness
Here's another priceless story from Blue. We've had plenty of branch and regional-level tales on this blog, so it's great to see that there was so much nonsense going on at the corporate level as well. Enjoy....
When our beloved (hah!) CEO turned 75, it was decided that to honor the occasion, there would be a party for him, and gifts and such. My manager wanted to get something for him anyways, but somewhere along the line the management team got an email from "the favorite son" basically TELLING all of them the gift the "management team" was going to get him and how much it would cost.
Apparently the family had major connections within the jewelry industry, and the old man really wanted an expensive watch - not sure of the brand, but I'm pretty sure it cost upwards of $20,000 or so on the retail market. In his note to his management team, the favorite son basically told all the managers that "even though he could OBVIOUSLY afford to buy this watch for his Dad, it would be a nice gesture if all of them contributed and also they would engrave something special on the back just for him." And apparently the sons would make up the difference on the gift (more on this later).
So basically all the managers had to cough up something like $300-500 each for the old man's birthday gift!! And from the sounds of it, this was a MANDATORY thing (in other words, if you didn't pony up, don't expect the family to keep you employed after that, since you obviously were not a team player!) So all of them pony-ed up, and I know my boss and a few of the others grumbled privately about it (well if they told me, maybe it wasn't so "private!") because it wasn't like they were sll earning the millions of dollars the family was, and after all, would you spend $500 on a birthday gift for your own family, let alone for YOUR BOSS???
The real kicker came after the fact. They had a little gathering, and if most of you remember, we all had to have group photos taken of our teams (what a joke that was) to be framed and presented to the old man. From what I heard, the old man basically thanked his sons for the watch, and didn't genuinely thank the other managers that actually paid for it.
And here's the real kicker, one that the old man himself will love if he is still actively reading this blog. Apparently, the not-as-favorite-son (the one who always resented taking a back seat to his brother) went around afterwards and confessed that, thanks to the wholesale deal they were able to get with their jewelry friends, there was enough money collected from the management team to pay 100% for the watch!!
So neither he nor his "favored" brother actually commited a penny of contribution to a gift for their old man, yet they took the majority of the credit for it!! How classic is that!!! :) And papa never knew!! In fact, it was probably the only gift papa got from them for his 75th birthday, and the sons didn't contribute at all!!
Now that's demonstrating effective management of your employees if ever there was an example!! Get them to pay for something, and then take all the glory for yourself.
When our beloved (hah!) CEO turned 75, it was decided that to honor the occasion, there would be a party for him, and gifts and such. My manager wanted to get something for him anyways, but somewhere along the line the management team got an email from "the favorite son" basically TELLING all of them the gift the "management team" was going to get him and how much it would cost.
Apparently the family had major connections within the jewelry industry, and the old man really wanted an expensive watch - not sure of the brand, but I'm pretty sure it cost upwards of $20,000 or so on the retail market. In his note to his management team, the favorite son basically told all the managers that "even though he could OBVIOUSLY afford to buy this watch for his Dad, it would be a nice gesture if all of them contributed and also they would engrave something special on the back just for him." And apparently the sons would make up the difference on the gift (more on this later).
So basically all the managers had to cough up something like $300-500 each for the old man's birthday gift!! And from the sounds of it, this was a MANDATORY thing (in other words, if you didn't pony up, don't expect the family to keep you employed after that, since you obviously were not a team player!) So all of them pony-ed up, and I know my boss and a few of the others grumbled privately about it (well if they told me, maybe it wasn't so "private!") because it wasn't like they were sll earning the millions of dollars the family was, and after all, would you spend $500 on a birthday gift for your own family, let alone for YOUR BOSS???
The real kicker came after the fact. They had a little gathering, and if most of you remember, we all had to have group photos taken of our teams (what a joke that was) to be framed and presented to the old man. From what I heard, the old man basically thanked his sons for the watch, and didn't genuinely thank the other managers that actually paid for it.
And here's the real kicker, one that the old man himself will love if he is still actively reading this blog. Apparently, the not-as-favorite-son (the one who always resented taking a back seat to his brother) went around afterwards and confessed that, thanks to the wholesale deal they were able to get with their jewelry friends, there was enough money collected from the management team to pay 100% for the watch!!
So neither he nor his "favored" brother actually commited a penny of contribution to a gift for their old man, yet they took the majority of the credit for it!! How classic is that!!! :) And papa never knew!! In fact, it was probably the only gift papa got from them for his 75th birthday, and the sons didn't contribute at all!!
Now that's demonstrating effective management of your employees if ever there was an example!! Get them to pay for something, and then take all the glory for yourself.
Thursday, February 28, 2008
Strange But True Tales from the Comments Section
"Blue" has been sharing some good stories in the comments section of various posts. I thought I would start passing them along. In addition, "Lastlaugh" has noted that Daddy and Junior were fired by FBR last week.
And now, on to the dirt, as told to us by faithful reader Blue:
During my time at FNLC, I was privvy to information that, to say the least, was embarrassing then (and is just plain funny now!) I have been reluctant to post on this blog for fear of reprisal (after all the Henschels are a family of lawyers) and I did sign a piece of paper that said in order to collect my (pitiful) severance, I had to refrain from discussing the company for 1 year. Well, that 1 year is up, and the company no longer exists, so I figure I will share some of my stories with everyone.
Before some pro-FNLCr's start bashing me, again I preface this to say that (1) all this info is 100% true; (2) I post it for entertainment purposes and for a little bit of relishing in the fact that the management team that screwed us all are now screwed themselves and (3) as a cautionary tale for those of you who would even consider working for this group of liars again.
Because so many managers had a big mouth at FNLC, it was easy to get access to information. Here is one of my favorite tidbits relative to the piece Anna just posted. The move to the T-Rex building was a poor error in judgement. They had just renewed their lease with the existing shit building in Deerfield Beach, and now they were going to move to this massive new building in Boca Raton, in the midst of a shrinking lending environment and the prospects of downsizing (not increasing/hiring) staff. Why did they do this? To satisfy the ego of one man who wanted to leave a lasting legacy and mark in his hometown of Boca Raton.
Even when a press conference was held to announce the T-Rex move, the press was very negative to FNLC (go back and search some of the stories in the Miami papers if you don't believe me). At the time they even stated that this was typical of many companies with CEOs who just wanted to satisfy their egos and have a workplace closer to their own homes to shorten their own commutes. And I remember some of the articles even accused FNLC at the time of likely letting go employees because of it! (which they insisted they wouldn't do).
When it looked like the market was crumbling, and costs had to be reduced, the obvious question was "why are we still moving to T-Rex?" The answer was because a lease was signed and it would have cost millions to get out of it. Instead they chose to start reducing staff and closing ops centers outside Florida to justify the expense of this monstrous new building. And for those of us who did eventually move into T-Rex, it had a creepy vibe and felt like a giant, empty shell from the very beginning.
Here's another:
It appears that the Henschels were not the only crooks behind this disaster. This just posted online on FBR - it seems that after losing millions of dollars these last few years (mostly due to FNLC), these crooks decided to give themselves a big, fat pay raise this week! I feel terrible for the FBR shareholders....
The Committee concluded that management's actions were materially beneficial to the Company and therefore that, in recognition of their efforts and achievements, certain members of executive management should receive bonuses in excess of the bonuses to which they would have been entitled based on the performance goals established in early 2007. The Committee reported its conclusions and recommendations to the Board of Directors, and the independent members of the Board approved the Committee's recommendations. These actions are described below. In addition, the Compensation Committee of the Board of Directors, and the independent members of the Board of Directors, of FBCM also took action on February 21, 2008, to approve executive compensation arrangements for 2008 for its executive officers. Please refer to the current report on Form 8-K filed with the SEC today by FBCM for information regarding those actions.
2007 Performance Bonuses. The Board approved final bonuses for 2007 for its named executive officers as follows: (i) a $2,475,914 bonus payable to Eric F. Billings, Chairman of the Board and Chief Executive Officer, of which $1,778,470 was payable in cash and $697,444 was payable in the form of a combination of FBR Group common stock and FBCM common stock, (ii) a $5,398,835 bonus payable to J. Rock Tonkel, Jr., President and Chief Operating Officer of the Company, of which $5,004,798 was payable in cash and $394,037 was payable in the form of FBR Group common stock, (iii) a $1,494,725 bonus payable to Richard J. Hendrix, President and Chief Operating Officer of FBCM, of which $1,073,672 was payable in cash and $421,053 was payable in the form of FBCM common stock, (iv) a $905,598 bonus payable to William J. Ginivan, Executive Vice President and Chief Legal Officer of the Company, of which $650,496 was payable in cash and $255,102 was payable in the form of acombination of FBR Group common stock and FBCM common stock, and (v) a $801,187 bonus payable to Kurt R. Harrington, Executive Vice President and Chief Financial Officer of the Company, of which $575,496 was payable in cash and $225,691 was payable in the form of a combination of FBR Group common stock and FBCM common stock.
I have a feeling this is just the tip of the iceberg from Blue.
And now, on to the dirt, as told to us by faithful reader Blue:
During my time at FNLC, I was privvy to information that, to say the least, was embarrassing then (and is just plain funny now!) I have been reluctant to post on this blog for fear of reprisal (after all the Henschels are a family of lawyers) and I did sign a piece of paper that said in order to collect my (pitiful) severance, I had to refrain from discussing the company for 1 year. Well, that 1 year is up, and the company no longer exists, so I figure I will share some of my stories with everyone.
Before some pro-FNLCr's start bashing me, again I preface this to say that (1) all this info is 100% true; (2) I post it for entertainment purposes and for a little bit of relishing in the fact that the management team that screwed us all are now screwed themselves and (3) as a cautionary tale for those of you who would even consider working for this group of liars again.
Because so many managers had a big mouth at FNLC, it was easy to get access to information. Here is one of my favorite tidbits relative to the piece Anna just posted. The move to the T-Rex building was a poor error in judgement. They had just renewed their lease with the existing shit building in Deerfield Beach, and now they were going to move to this massive new building in Boca Raton, in the midst of a shrinking lending environment and the prospects of downsizing (not increasing/hiring) staff. Why did they do this? To satisfy the ego of one man who wanted to leave a lasting legacy and mark in his hometown of Boca Raton.
Even when a press conference was held to announce the T-Rex move, the press was very negative to FNLC (go back and search some of the stories in the Miami papers if you don't believe me). At the time they even stated that this was typical of many companies with CEOs who just wanted to satisfy their egos and have a workplace closer to their own homes to shorten their own commutes. And I remember some of the articles even accused FNLC at the time of likely letting go employees because of it! (which they insisted they wouldn't do).
When it looked like the market was crumbling, and costs had to be reduced, the obvious question was "why are we still moving to T-Rex?" The answer was because a lease was signed and it would have cost millions to get out of it. Instead they chose to start reducing staff and closing ops centers outside Florida to justify the expense of this monstrous new building. And for those of us who did eventually move into T-Rex, it had a creepy vibe and felt like a giant, empty shell from the very beginning.
Here's another:
It appears that the Henschels were not the only crooks behind this disaster. This just posted online on FBR - it seems that after losing millions of dollars these last few years (mostly due to FNLC), these crooks decided to give themselves a big, fat pay raise this week! I feel terrible for the FBR shareholders....
The Committee concluded that management's actions were materially beneficial to the Company and therefore that, in recognition of their efforts and achievements, certain members of executive management should receive bonuses in excess of the bonuses to which they would have been entitled based on the performance goals established in early 2007. The Committee reported its conclusions and recommendations to the Board of Directors, and the independent members of the Board approved the Committee's recommendations. These actions are described below. In addition, the Compensation Committee of the Board of Directors, and the independent members of the Board of Directors, of FBCM also took action on February 21, 2008, to approve executive compensation arrangements for 2008 for its executive officers. Please refer to the current report on Form 8-K filed with the SEC today by FBCM for information regarding those actions.
2007 Performance Bonuses. The Board approved final bonuses for 2007 for its named executive officers as follows: (i) a $2,475,914 bonus payable to Eric F. Billings, Chairman of the Board and Chief Executive Officer, of which $1,778,470 was payable in cash and $697,444 was payable in the form of a combination of FBR Group common stock and FBCM common stock, (ii) a $5,398,835 bonus payable to J. Rock Tonkel, Jr., President and Chief Operating Officer of the Company, of which $5,004,798 was payable in cash and $394,037 was payable in the form of FBR Group common stock, (iii) a $1,494,725 bonus payable to Richard J. Hendrix, President and Chief Operating Officer of FBCM, of which $1,073,672 was payable in cash and $421,053 was payable in the form of FBCM common stock, (iv) a $905,598 bonus payable to William J. Ginivan, Executive Vice President and Chief Legal Officer of the Company, of which $650,496 was payable in cash and $255,102 was payable in the form of acombination of FBR Group common stock and FBCM common stock, and (v) a $801,187 bonus payable to Kurt R. Harrington, Executive Vice President and Chief Financial Officer of the Company, of which $575,496 was payable in cash and $225,691 was payable in the form of a combination of FBR Group common stock and FBCM common stock.
I have a feeling this is just the tip of the iceberg from Blue.
Tuesday, February 26, 2008
$50 Million!
First NLC's bankruptcy lists more than $50 million in debt
First NLC Financial Services LLC, a subprime mortgage lender that moved hundreds of jobs from Deerfield Beach to Boca Raton just a year ago, has filed for Chapter 11 bankruptcy protection.
The parent company, Arlington, Va.-based investment bank Friedman, Billings, Ramsey Group (NYSE: FBR) said First NLC would liquidate its assets due to continued deterioration in the subprime market.
Such weakness has caused numerous local and national lenders, both in the subprime and prime categories, to exit the business.
First NLC's Chapter 11 filing was made in the U.S. Bankruptcy Court for the Southern District of Florida, West Palm Beach division on Jan. 18. The filing listed more than $50 million in debt and hundreds of creditors.
The top unsecured creditors are Goldman Sachs Mortgage Co., HSBC Mortgage Services, Deutsch Bank Securities and U.S. Bank Corporate Trust Services.
Miami law firm Berger Singerman is representing the debtor, including attorneys Arthur Spector, Paul Avron and Paul Singerman. The U.S. trustee is Heidi Feinman in Miami.
The company also announced on Jan. 11 that it would not close on the pending sale of First NLC to Boca Raton-based Sun Capital Partners.
Following the filing, the Web site for First NLC carried a simple statement: "Due to conditions beyond our control, effective immediately, we are no longer taking applications. Those loans where closing documents have been executed will be funded in the normal manner."
FBR Group signed an agreement in July with an affiliate of Sun Capital for a $75 million recapitalization of First NLC. That deal would have resulted in a reduction of FBR Group's ownership in First NLC to 20 percent.
FBR Group said that, in connection with the Chapter 11 filing, it does not expect to recover its remaining $12 million investment in First NLC.
Founded in 1987, First NLC had 2,100 employees in 70 branches nationwide in 2006. The company continued expanding its mortgage sales, even as the real estate market slowed in early 2006.
In November 2006, First NLC moved corporate headquarters and 450 jobs from three buildings on Hillsboro Boulevard to the Boca Corporate Center and Campus, formerly known as T-Rex. At that point, First NLC said it would add 200 more jobs.
In early August, First NLC laid off half its employees. At the time, Andrew Henschel, the company's VP of corporate governance, said he did not anticipate any more layoffs, and that the company plans to "vigorously compete" in the market.
First NLC Financial Services LLC, a subprime mortgage lender that moved hundreds of jobs from Deerfield Beach to Boca Raton just a year ago, has filed for Chapter 11 bankruptcy protection.
The parent company, Arlington, Va.-based investment bank Friedman, Billings, Ramsey Group (NYSE: FBR) said First NLC would liquidate its assets due to continued deterioration in the subprime market.
Such weakness has caused numerous local and national lenders, both in the subprime and prime categories, to exit the business.
First NLC's Chapter 11 filing was made in the U.S. Bankruptcy Court for the Southern District of Florida, West Palm Beach division on Jan. 18. The filing listed more than $50 million in debt and hundreds of creditors.
The top unsecured creditors are Goldman Sachs Mortgage Co., HSBC Mortgage Services, Deutsch Bank Securities and U.S. Bank Corporate Trust Services.
Miami law firm Berger Singerman is representing the debtor, including attorneys Arthur Spector, Paul Avron and Paul Singerman. The U.S. trustee is Heidi Feinman in Miami.
The company also announced on Jan. 11 that it would not close on the pending sale of First NLC to Boca Raton-based Sun Capital Partners.
Following the filing, the Web site for First NLC carried a simple statement: "Due to conditions beyond our control, effective immediately, we are no longer taking applications. Those loans where closing documents have been executed will be funded in the normal manner."
FBR Group signed an agreement in July with an affiliate of Sun Capital for a $75 million recapitalization of First NLC. That deal would have resulted in a reduction of FBR Group's ownership in First NLC to 20 percent.
FBR Group said that, in connection with the Chapter 11 filing, it does not expect to recover its remaining $12 million investment in First NLC.
Founded in 1987, First NLC had 2,100 employees in 70 branches nationwide in 2006. The company continued expanding its mortgage sales, even as the real estate market slowed in early 2006.
In November 2006, First NLC moved corporate headquarters and 450 jobs from three buildings on Hillsboro Boulevard to the Boca Corporate Center and Campus, formerly known as T-Rex. At that point, First NLC said it would add 200 more jobs.
In early August, First NLC laid off half its employees. At the time, Andrew Henschel, the company's VP of corporate governance, said he did not anticipate any more layoffs, and that the company plans to "vigorously compete" in the market.
Thursday, January 31, 2008
Hey Daddy and Junior - Don't Forget Tax Time!!!
Great comments from henshelsforjail (love the username) today got me thinking about a potential problem former FNLC'ers may face during the next few months. I'm talking about the possibility of our W-2 forms being delayed or not being sent at all. This was something my team discussed when we were laid off a few months before the company went bankrupt. Given the fact that many of us had problems signing up for unemployment benefits due to erroneous bookkeeping, it wouldn't surprise me if this nasty W-2 business is swept under the rug, at least until the last possible minute.
To put things into perspective, I earned money from four different entities in '07, including a brief stint collecting unemployment after Daddy and Junior sent me on permanent vacation. Not surprisingly, three of the four W-2's have already been sent to me. Guess who the fourth is?
Here's the thing - I don't like to wait until the last minute to file taxes. I either WANT MY REFUND RIGHT NOW or I want to have some time to pay my amount due before April 15th. I imagine many of you feel the same way. Hell, I bet there are some of you that are expecting a refund and could really use the cash since, y'know, First NLC isn't around to deposit that paycheck into your bank account twice a month.
Has anybody received their W-2 yet? Right now, I'm not expecting much, other than one final screw job by Daddy and Junior. On the other hand, at least I didn't foolishly and arrogantly run my company into the ground, so I guess I have that to be thankful for!
To put things into perspective, I earned money from four different entities in '07, including a brief stint collecting unemployment after Daddy and Junior sent me on permanent vacation. Not surprisingly, three of the four W-2's have already been sent to me. Guess who the fourth is?
Here's the thing - I don't like to wait until the last minute to file taxes. I either WANT MY REFUND RIGHT NOW or I want to have some time to pay my amount due before April 15th. I imagine many of you feel the same way. Hell, I bet there are some of you that are expecting a refund and could really use the cash since, y'know, First NLC isn't around to deposit that paycheck into your bank account twice a month.
Has anybody received their W-2 yet? Right now, I'm not expecting much, other than one final screw job by Daddy and Junior. On the other hand, at least I didn't foolishly and arrogantly run my company into the ground, so I guess I have that to be thankful for!
Monday, January 14, 2008
The Online Post Mortem
All that's left of firstnlc.com and thelendingcenter.com is this statement:
Due to conditions beyond our control, effective immediately we are no longer taking applications.
Those loans where closing documents have been executed will be funded in the normal manner.
I've pasted a screenshot to capture this moment. I figure the web hosting bill will be due soon, and then there will be nothing - anybody want to buy some domain names?
Due to conditions beyond our control, effective immediately we are no longer taking applications.
Those loans where closing documents have been executed will be funded in the normal manner.
I've pasted a screenshot to capture this moment. I figure the web hosting bill will be due soon, and then there will be nothing - anybody want to buy some domain names?
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