Gainesville-based Homestar Financial Corporation has announced it will cease retail operations for its mortgage lending business.
In a press release, Homestar said it has informed its internal staff that it will accept locks through Oct. 31 and will continue to fund all locked loans in its pipeline.
The company, which has become a top mortgage purchase lender nationwide, said the decision comes in response to additional mortgage volatility driven by macroeconomy.
“Over the past two months, the 10-year Treasury rate has risen almost 100 basis points after a period of relative stability at already high mortgage rates,” the release said. “As a direct result, mortgage rates recently hit 8%, and, as an industry, lock volume dropped 20% from August to September according to reports.”
The company said it believed these recent events have made mortgage lending unsustainable for “anyone except the most deep-pocketed lenders.”
“During the past two decades, I have always been able to successfully lead us through the cyclicality of the ever-shifting housing and mortgage markets, however over the past year, that has not been the case,” Homestar’s founder and CEO Wes Hunt said. “The financial losses for mortgage lenders continue to mount due to continued market compression leading to lower margins and higher interest rates leading to lower volume. As we head into a period of historically seasonal lows, for protection, with no end in sight for the margin compression or realistic prospects of lower rates, I have decided not to incur further financial risk over the coming months.”
Homestar said it will fulfill its financial obligations and will be working with all its counterparties during this transition.
“At the time of this announcement, no plans have been made regarding future strategic decisions by the Company,” the release said.
Homestar has originated over $10 billion of consumer mortgages over the past five years.
