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Phoenix-based financial services firm to exit mortgage business, focus on insurance

Tuesday, September 6, 2022   /   by Juan Grimaldo

Phoenix-based financial services firm to exit mortgage business, focus on insurance

Citing a lack of loan production, a 34-year-old Valley financial services company will exit the mortgage business.

Ron Martin, the president of Phoenix-based Suburban Mortgage Inc., said in an email to the Business Journal that the operation isn't shuttering but will focus on its insurance business going forward.

"After 34 years we decided to conduct an orderly wind-down of our mortgage business," he stated. "Capital and liquidity are not the issue, but the lack of loan production. We built an engine to comfortably produce $35 million in monthly loan production. Our bread and butter has always been [mortgage] purchase business driven through our Realtor relationships. However, the volume of purchase transactions is no longer fueling this engine. So, we have decided to conserve capital and cash by exiting the origination business."

Martin said the company will not dissolve nor drain cash from the corporation. It will continue to process, underwrite and close existing rate locks to sell them into the secondary markets but are not taking applications or new locks.

The origination staff will be kept on to accomplish that, he said.

Martin added that the firm will focus on winding down the mortgage business responsibly and focus on the company's insurance business going forward.

The firm employs between 51 and 200 people, according to its LinkedIn page. Martin said that Suburban Mortgage had an 80% staff reduction as a result of this decision.

The company's website — SubMort.com — shows an error message when visited, saying that the domain name isn't connected to the website.

Housing Wire reported that Suburban Mortgage was founded in September 1988 and is licensed in Arizona, California and New Mexico. It has offices in Casa Grande, Mesa, Peoria, Prescott and Scottsdale.

Suburban Mortgage's decision to close comes on the heels of other mortgage lender layoffs throughout the Valley. A robust housing market in 2020 and 2021 caused firms to hire more employees to keep with demand. As experts say the market has cooled off with mortgage interest rates rising, some of those firms might be overstaffed while fewer transactions are coming in.

Scottsdale-based VIP Mortgage Inc. — the top mortgage lender and broker in the Valley — let go of 26 employees at the company. Michael Metz, operations manager for Scottsdale-based VIP Mortgage Inc, said that was because of increased rates have caused refinance volume to plummet, and purchase volume has dipped because of concerns about housing inventory and payment affordability.

Over the past few months, large banks such as Wells Fargo & Co. (NYSE: WFC) and JPMorgan Chase & Co. have pulled back on their mortgage lending.

In June, JPMorgan confirmed it was cutting more than 1,000 employees from its home-lending unit as a result of cyclical changes in the mortgage market.

Written byRon Davis  –  Reporter, Phoenix Business Journal.

The Grimaldo Group
Juan Grimaldo
2403 N Pebble Creek Pkwy #101
Goodyear, AZ 85395

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