OceanFirst Financial Corp. in Toms River, N.J., said it will close its troubled mortgage unit, Columbia Home Loans LLC, rather than sell it.
The $2 billion-asset OceanFirst had been in negotiations with an interested buyer, but said in a filing last week with the Securities and Exchange Commission that its board has voted instead to dissolve the mortgage unit within six months.
OceanFirst has lost nearly $7 million in the last two quarters, largely because of defaults on subprime loans made by Columbia, of Valhalla, N.Y. Most of the defaults were on loans with loan-to-value ratios of up to 100%.
Columbia stopped making subprime loans in March. OceanFirst said it expects to take a $900,000 charge related to the decision to shutter the unit, to cover employee severance and the cancellation of lease agreements. It said those costs do not include the expected operating losses during the discontinuation period.
