View Full Version : Another (subprime) mortgage company goes down

02-14-07, 08:41 AM
ResMAE was started in late 2001 by Jack Mayesh, Edward Resendez and William Komperda, who had sold Long Beach Financial, another subprime lender they founded, to Washington Mutual (NYSE:WM (http://finance.yahoo.com/q?s=wm) - News (http://finance.yahoo.com/q/h?s=wm)) in 1999.
ResMAE grew quickly to become a top 20 subprime lender in the U.S. However, by early 2005, loan originations began to wane, knocking ResMAE's profitability. By cutting costs and lifting the interest rates it charged on loans, the company said it was able to make a small profit last year "despite the industry collapsing around it." But then Merrill Lynch (NYSE:MER (http://finance.yahoo.com/q?s=mer) - News (http://finance.yahoo.com/q/h?s=mer)), which had become the largest buyer of ResMAE's loans, asked the company to repurchase more than $300 million worth of loans. That "enormous" repurchase request, which ResMAE disputes, triggered a liquidity crisis and forced the company to put itself up for sale.