Homestar Financial Corporation to wind down operations

Homestar Financial Corporation announced Tuesday it will cease its operations.

In a statement, the mid-sized lender said the decision to close shop “comes on the heels of additional mortgage volatility driven by the macro economy.” As of mid-October, mortgage interest rates have continued to lurch towards 8%, making lending all the more difficult.

“These unforeseen events have made mortgage lending unsustainable for anyone except the most deep-pocketed lenders,” Homestar added in a statement. The shutdown was first reported by National Mortgage Professional.

The Georgia-based lender will accept locks through Oct. 31, 2023 and will continue to fund all locked loans in its pipeline, it said. This decision will impact at least 179 loan officers who are currently sponsored by the mortgage shop, per the National Mortgage Licensing Service as of Wednesday.

According to a current employee, the company will be officially ceasing operations in 60 days after they close out existing loans that are locked.

West Hunt, the founder and CEO of Homestar, underlined how difficult the current market has been in recent months, noting this decision was made “for protection.”

“During the past two decades, I have always been able to successfully lead us through the cyclicality of the ever-shifting housing and mortgage market, however over the past year, that has not been the case,” he wrote. “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.”

The company claims to have ample liquidity and net worth to fulfill its financial obligations and will be working with its counterparties during the transition. No plans have been made regarding future strategic decisions by the company, a statement read.

Homestar, founded in 2002, was a full-service mortgage banker controlling every aspect of the loan process with in-house processing, underwriting, closing, and funding of each mortgage transaction. It offered conventional, FHA, VA, USDA and jumbo mortgage products and was licensed to operate in over 40 states and Washington D.C. 

Per the mortgage shop, it originated over $10 billion worth of mortgages over the past five years.

The lender joins countless other companies that have decided to either shutter their doors in reaction to a volatile market or sell their business to a competitor.


Related Articles