Accredited Announces Strategic Restructuring
|August 23, 2007
SAN DIEGO-- Accredited Home Lenders Holding Co. (NASDAQ:LEND) ("Accredited" or "Company") announced today that it will take several steps to restructure the Company's overall operations in response to the ongoing turmoil in the non-prime mortgage industry. The Company will implement the following changes to its loan origination and settlement services platforms:
- Substantially all of the retail lending business consisting of 60 retail branch locations and 5 centralized retail support locations will be effectively closed as of September 5, 2007, impacting approximately 480 positions nationwide. Accredited will continue to operate its San Diego-based customer retention unit that assists the Company's loan servicing customers.
- Five of the Company's ten wholesale divisions will be substantially closed effective September 5, 2007. These closures, combined with reductions in staff at the remaining five divisions, will reduce the wholesale workforce by approximately 490 positions, leaving approximately 340 employees in the wholesale operation.
- Effective immediately, no new U.S. loan applications will be accepted, although the Company will honor existing commitments. Accredited intends to resume wholesale loan originations based upon improvement in market conditions.
- The Company's settlement and insurance services division, Inzura Settlement Services, which provides appraisal, title insurance and other settlement services, will be substantially reduced.
- Headquarters staff in San Diego, CA will be significantly reduced to approximately 220 people from its current workforce of approximately 400.
After completion of the restructuring, the Company expects that the total workforce, including Canada, will be approximately 1,000 employees, down from the previously announced 2,600 employees as of June 30, 2007.
James A. Konrath, chairman and chief executive officer, commented, "These difficult decisions were made out of necessity in light of the continued and widely publicized turbulence in the mortgage and financial markets, but with a heavy heart. Many of the people who are affected by these decisions have been productive, dedicated, and loyal colleagues for many years. We will miss them and the enthusiasm and creativity that they brought to their jobs every day at Accredited."
The Company reported that neither its Canadian operations nor its servicing platform for its loan portfolio of $8.4 billion as of June 30, 2007 will be affected by the restructuring. Mr. Konrath added, "Accredited's delinquency and loss numbers have historically been among the best in the industry. Even though our servicing ratings have been downgraded over liquidity concerns in recent months, we intend to maintain the quality of our servicing operations and expect to continue providing the highest level of loan servicing for our bond investors."
With this restructuring and the recently announced trade of approximately $1 billion of the Company's loan inventory with a right to repurchase, Accredited believes that the cash flows from the Company's securitized loans, servicing income and other income will enable the Company to maintain its downsized operations until market conditions improve and the Company can resume loan origination operations. The Company expects to maintain its three existing warehouse credit facilities with a total capacity of $1.6 billion for U.S. loan originations and $150 million Canadian for Canada loan originations. The trade of loans substantially reduces the outstanding borrowings under the Company's warehouse credit facilities, as well as the Company's exposure to margin calls by the warehouse lenders.
Mr. Konrath added, "We believe that the streamlining of our operations and significant curtailment of new loan originations are required to preserve liquidity during the current and anticipated market conditions, and are also designed to position Accredited to compete in the mortgage market when it functions more rationally. We will closely monitor the market in order to be responsive to changes in the future."
Source: Accredited Home Lenders Holding Co.