The Collapse and Demise of Homebanc

Over Extended:

The Collapse and Demise of Homebanc

By: Desire Bodden

Unless you have been living under a rock for the past year or so, I am sure that you are no stranger to the home mortgage crisis that the United States has only just fallen under within recent years. Homebanc, which was one of the largest lenders, is just one of the latest victims of this misfortune. Recently, the once flourishing lender had to file for Chapter 11 bankruptcy. Many may ask the question, “How could this happen?” There are a number of reasons that can contribute to the fall of a major company such as Homebanc. I will address many of these issues in this paper. I will give a brief history on Homebanc, specifically explain some of the recent trends in home buying and selling and explain the factors that contributed to the demise of Homebanc.

As described by Reuters: HomeBanc Corp. serves as the parent holding company for its wholly owned subsidiary, HomeBanc Mortgage Corporation (HBMC). The Company, through HBMC, originates residential mortgage loans through its 21 store locations, and as of December 31, 2006, and its 140 realtor store-in-store locations in the states of Georgia, Florida and North Carolina. HBMC's mortgage product line includes conforming Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage (Freddie Mac) mortgage loans, Federal Housing Administration/Veterans Administration (FHA/VA) government-insured mortgage loans, adjustable-rate mortgage loans, including construction-to-permanent and second-lien mortgage loans, non-conforming jumbo loans and a limited volume of sub-prime mortgage loans. At its height, the Atlanta based company employed over 1,100. Homebanc was also one of the largest mortgage lenders in the Southeast and ranked as one of the "100 Best Companies to Work For" four years in a row according to FORTUNE magazine. Needless to say, Homebanc was revered as a solid force in the world of home lending, with little thought that...