Investors demanded that lender repurchase defaulted loans
Thursday, December 28, 2006
Inman News
The parent company of Harbourton
Mortgage Investment Corp. says the Virginia-based lender has closed its doors.
HMIC was forced to stop funding new loans
and "initiate a process to wind down its operations" on Dec. 20,
after investors who had purchased loans from the company demanded the lender
buy them back, according to a statement
issued by parent company Harbourton Capital Group Inc.
When Harbourton Capital reported its
third-quarter results on Dec. 8, the company said HMIC recorded a provision for
third-quarter losses of $954,000 "in response to a significant increase in
the loans sold to investors that experienced an early payment default, under
which HMIC may have liability to the investor."
HMIC had losses of $1.19 million for
the quarter ending Sept. 30, including $260,000 in one-time expenses related to
an Aug. 31 acquisition of Molton Allen Williams Mortgage Company LLC.
Harbourton Capital President and
Chief Executive Officer J. Kenneth McLendon said at the time that a decline in
real estate activity and market values "significantly impacted" the
company.
In its latest statement Wednesday,
Harbourton Capital said the company would likely write off its full investment
in HMIC.
"Management
hopes the cessation of the continuing losses from HMIC will enable HCG and its
mezzanine lending subsidiary, Harbourton Financial Corporation, which is not
impacted by HMIC's closure, to stabilize their financial operations in
2007," the company said.
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Copyright 2006 Inman News
