The mortgage lending subsidiary of a bank backed by billionaire Wilbur Ross is ending operations as the bank restructures.
Through WL Ross & Co. LLC, Ross reached an agreement in 2010 to invest $100 million in Sun Bancorp Inc.
Capital from that deal was intended to allow the Vineland, N.J.-based firm to “strengthen and expand current operations as well as to pursue growth opportunities throughout the state of New Jersey,” according to an announcement at the time.
The transaction gave Ross, who at the time owned American Home Mortgage Servicing Inc., an interest in Sun Home Loans.
On Thursday, Sun Bancorp announced a “comprehensive restructuring” that includes a series of significant initiatives intended to improve its profitability as well as its credit and operational performance metrics.
The restructuring plan was proposed by Thomas M. O’Brien, who was appointed president and chief executive officer of the bank-holding company and Sun National Bank on Wednesday. He was also elected to the boards of directors of both entities.
His plan received full board approval.
“We have evaluated and decided to exit business lines in which the company is not profitable,” O’Brien said in the statement. “The company will focus on those businesses where it can offer a strong menu of commercial banking products and services.”
The mortgage business apparently didn’t make the cut.
Operations at Sun Home Loans, which originated through the retail channel, will be ceased.
No new applications are being accepted, though current commitments for approved loans will be honored and funded.
“The residential mortgage banking model has evolved into a highly commoditized business,” O’Brien explained. “The residential home loan product is further becoming significantly less profitable and much more highly regulated to the point where it has become less attractive for the bank.”
The $3 billion company expects to cut annual costs by $9.5 million as a result of the exit from mortgage lending.
While home-equity lending will apparently continue at the bank, it will be de-emphasized.
In addition, Sun National Bank is selling or consolidating a number of branches.
The company will eliminate 242 jobs as part of the restructuring.
Mortgage Daily has identified 28 mortgage-related businesses that either failed or were closed down so far during 2014.
