Six months after shutting down its correspondent lending division, Illinois-based mortgage company Celebrity Home Loans‘ bread-and-butter retail channel is also at risk, multiple sources told HousingWire.
According to former employees and business partners, several Celebrity’s retail branches transitioned to another lender in December and January. Celebrity is also in talks to strike a deal with Arizona-based On Q Financial regarding its remaining business. At this point, it’s unclear whether it’s a merger or acquisition. It’s also not immediately clear which assets would be involved in the transaction.
The sources also said Celebrity has imposed several layoff rounds on its workforce over the last three weeks. Several ex-employees mentioned they did not receive their last paychecks and severance payments. Whether loan commissions will be paid remains murky, one source said.
Representatives for Celebrity and On Q Financial did not respond to multiple requests for comments.
One former corporate employee, who requested anonymity, said hundreds were let go at the corporate side of Celebrity over the past few weeks. Meanwhile, the same source said that sales personnel were given the opportunity to move over to On Q Financial.
The employee was laid off on Feb. 7 but said she did not receive her last paycheck or severance, “which I was told I was to be given.” But a different ex-employee who was laid off three weeks ago told HousingWire she received the last paycheck and severance.
A third former Celebrity employee said that on Feb. 7 at 10:30 a.m. the company said it had “merged” with On Q Financial. Managers called the employees at 4:30 p.m. to tell them they were laid off, she said. “Just yesterday, they sent a separation letter and will not pay us our last check,” the former employee told HousingWire.
Another round of layoffs happened Monday, when a former employee said he received an email saying the company will not be able to process its full payroll obligations on Feb. 16.
The email, reviewed by HousingWire, says employees will not receive any compensation during this pay period, but they may qualify for a hardship withdrawal or loan from the 401k.
“We are anticipating additional funds and believe this is only a timing issue with our sincere intent to provide you all compensation that is owed to you over the next several weeks,” the email reads
Before news on layoffs and a potential deal with On Q, a lender that did about $974 million in volume in 2022, Celebrity’s branches – which have their own DBAs – were transitioning to other retail mortgage lenders.
According to Nationwide Multistate Licensing System (NMLS) data, Celebrity-affiliated Neo Home Loans branches in California, Arizona, Colorado and Nevada transitioned to Minnesota-based mortgage lender Luminate Home Loans in December. Sources said Apex Home Loans and Robert Coomer Group also joined Luminate from Celebrity.
Part of the financial services holding company Celebrity Financial, Celebrity reached $21 billion in home loans in 48 states since 2006, according to its website.
Data from mortgage recruiting platform Modex shows that the company originated $5.5 billion in the last 12 months, across 312 active loan officers and 82 branches. Its volume fell from $640 million in March 2022 to $230 million in December 2022, according to Modex.
Amid the market downturn that began last year, Celebrity closed its correspondent channel, which affected mainly its Cypress Mortgage Capital division. The correspondent business for Celebrity offered non-qualified mortgages, prime jumbos and reverse mortgages.
On Jan. 31, Celebrity announced it partnered with Fortuna to offer exclusive bridge financing to consumers transitions from one home to another. According to the program, the bridge loans and the new purchase loan will be originated by the same Celebrity loan originator.