Fla., is trying to pick itself up again under a new corporate structure.
Once a rising star in the subprime mortgage industry, CFI is now wheezing its way out of bankruptcy.
The company announced Monday that the U.S. Bankruptcy Court for the Southern District of Florida had discharged it from Chapter 11. When it filed, CFI said doing so was necessary because values have dropped on subprime mortgage loans, its principal business.
CFI has done a companywide reorganization, including the appointment of Stephen E. Williams as its chief executive officer. Mr. Williams has been the chief executive of First Mortgage Securities Inc., Clearwater, Fla., for the last two years and will continue to serve in that capacity. Mr. Williams replaces Christopher Castoro, who led the company since founding it nine years ago. He will be a director and vice president of the overhauled company, focusing on mortgage operations. CFI also announced that it hired Weinick Sanders Leventhal & Co. of New York as its new independent auditor, replacing Grant Thornton, which was hired in February last year.
CFI Mortgage was among the industry's up-and-comers in 1997, during a period of aggressive expansion and ambitious acquisitions. During that year, CFI opened its subsidiary, Direct Mortgage Partners Inc., which specialized in subprime loans all over the country. It also acquired CT Mortgage, a subprime regional wholesale operation, and California Pacific Mortgage Co., Laguna Beach, in October. California Pacific had subprime operations in Arizona, California, Idaho, Indiana, Montana, New Mexico, Oklahoma, Oregon, Utah, and Wyoming.
CFI said that it funded more than $70 million in subprime mortgages in 1997, a 385% increase from $14.6 million the year before. But the company hit bad times in 1998 as the capital markets dried up, bringing on a liquidity crunch in the subprime markets.
It reported a $4.3 million loss for the first six months of 1998, and a $3.9 million pretax second-quarter loss related to writeoffs in August. The company's net losses totaled $7.8 million for the first nine months of 1998.
CFI then sold its conforming retail lending unit, Bankers Direct Mortgage Corp., to Inverrary Trace Inc. for $2.5 million. Continuing the dismembering, 955,000 common shares of CFI were sold to Mediforce, Inc. in November for about $1.4 million.
Neither Mr. Williams nor Mr. Castoro returned calls by press time.