The tumult continues at Hamilton Financial Services Corp.
In the latest upheaval, employees at one of the San Francisco-based company's units, Builders Funding Corp., have defected to J.I. Kislak Mortgage Corp.
This month Hamilton Financial announced that it would lay off 120 employees as part of a restructuring to reduce costs.
Thomas H. Meyer, chief executive of Builders Funding, and his staff of four resigned on Jan. 20.
"It was just a souring relationship with a different view of the business and a lack of commitment on their part," said Mr. Meyer about Hamilton Financial.
Builders Funding is one of a handful of companies trying to form controlled business arrangements between lenders and real estate brokers or homebuilders.
In such an arrangement, the partners can legally share profits from mortgage originations. Such ventures were made legal by the Department of Housing and Urban Development last March.
The ventures have become increasingly popular as loan volume has plummeted since February and home sales have been less than robust.
Hamilton has replaced Mr. Meyer with John Hooff. Most recently, Mr. Hooff was president of Franklin Mortgage Capital Corp., McLean, Va. Hamilton also announced that Builders Funding would be moved from Coral Gables, Fla., to McLean, Va., within two weeks.
Steven Hoff, chief executive of Hamilton, Carter, Smith & Co., a subsidiary of Hamilton Financial and parent of Builders Funding, said his company had been searching for a replacement for Mr. Meyer since May.
Mr. Hoff said Mr. Meyer lacked the mortgage banking experience necessary to advance Builders Funding "to the next level" by expanding its client base. He said Beverly Hills, Calif.-based Hamilton Carter remains committed to Builders Funding and CBAs, which it views as the coming means of loan originations.
Mr. Meyer responded that Hamilton did not want to put up the money necessary to take Builders Funding "to the next level."
He said his team's link with Miami Lakes, Fla.,-based Kislak would improve its ability to sign on CBAs. Kislak will provide the funding for its new subsidiary, tentatively called Home Builders Mortgage Network, "but at an arm's length," Mr. Meyer said. Kislak will have to compete for CBA contracts like other lenders, he said.
Nevertheless, Kislak will also provide its new unit with a greater product selection and the ability to do private-label mortgage programs for realty companies and homebuilders.
Hamilton Financial has been reeling for about six months. It reported a loss of $5.8 million, or 97 cents per share, for the third quarter, which ended Sept. 30.
And in the fall, Hamilton put itself on the block and hired Keefe, Bruyette & Woods Inc., the investment bank, to help.