PHOENIX (AP) A Phoenix-based mortgage company that lost $1.5 billion to a loan defaulting lender and had to go under, was rescued by a loan company it bought for $100 million.
Lendmark Financial Services Corp. said Friday it will continue to take on a $100-million line of credit from a local lender.
The company is now the only one in the Phoenix area that can legally loan to big banks.
The loan will cover a $1 billion line of business.
The company, which is one of the biggest providers of mortgages in the country, will be sold to a bank owned by a major bank that is owned by the same company, said Jeff Gorman, chief executive officer of Lendmark.
The bankruptcy of LenderOne, the company’s parent company, was triggered when LendMark and a consortium of lenders took on $1,400 in mortgage debt that the company failed to pay in January.
LenderOne owed $1 million to Phoenix’s largest mortgage lender, LendMaster, and another $2.5 million to its affiliate, Mortgage Master Mortgage Services Inc. The lenders are in the process of refinancing the debt.
The lenders are looking for a buyer for LendOne.
Lendmaster was already selling mortgage loans to another lender in the Valley that is also under investigation for its dealings with Lendmarks former partner.