No Red Tape Mortgage, a Sherman Oaks, CA based wholesale Alt-A mortgage lender closed down today after months of struggling in the now defunct mortgage industry.
After the subprime blowout months ago, Alt-A lenders fell under higher scrutiny, and companies like No Red Tape, a small lender compared to national lenders such as Countrywide and IndyMac, simply couldn’t compete, and subsequently got squeezed out of the market.
Recently, Sterling Partners, a Chicago-based private equity firm bought out and took control of the ailing company, along with parent company Metrocities to keep things afloat.
As a result, No Red Tape responded to market conditions by laying off half of their staff, leaving about 50 employees with jobs.
Today, the company was forced to shut its doors after failing to turn things around with their new conforming loan product and their reduced staff.
No Red Tape had been a national lender, doing business in many of the 50 states up until a few months ago when they cut their business down to the state of California only, mainly due to buybacks, foreclosures, and fraudulent loans closed elsewhere in the country.
That seemed to be the last straw for the company, as it was only a matter of months before the company ultimately folded.
The company was formed in 1998 as a wholesale arm of Metrocities Mortgage, and enjoyed solid business during the mortgage boom over the last five years.
No Red Tape originally specialized in Alt-A jumbo loans, creating a niche as a paperless, efficient and speedy lender with a simplified submission system and a tech-heavy platform.
It is unclear whether new deals can be submitted to the company, although submitted loan applications should continue to be processed by a “skeleton crew”.
Their former parent company, Metrocities, is still active and doing business as usual.
Update: The company has re-launched, specializing in Residential Alt-A Wholesale and Commercial Bridge Equity Financing.
See a list of closed lenders throughout the United States.