United Home Loans unable to write new business

GE Money withdrew from funding third party mortgage originators last October. While United had been using other funding providers, Lombard says difficult market conditions have deteriorated further since October. Although it has had ongoing discussions with alternative funders, United "is no longer in a position to originate new mortgage transactions," Lombard said. United will continue to receive monthly trail payments from various lenders, unless loans are in default, and will gradually run down its mortgage book, the company said. Lombard bought United from Hanover Group in December 2007 for $1.425 million. It wrote down its value to $1.086 million at September 30 and will be "impairment tested" again at March 31, it said. It has been clear for months that United hasn’t been trying to attract new business. Its floating mortgage rate has remained unchanged at 10.22% since September last year while active lenders have been aggressively cutting rates in response to the Reserve Bank cutting its official cash rate. ASB Bank, for example, has cut its floating rate from 10.25% to 6.9% over that period. Last week, Lombard told the stock exchange its other mortgage originator, Tasman Mortgages, ceased writing new business has had management of much of its loans taken over by a major lender, significantly reducing its trail income and the size of mortgages under management. Lombard didn’t say which lender was involved. It also said another arm of the business, Tasman Mortgage Brokers, is subject to a wind-up application from the Inland Revenue Department. This relates to unpaid tax from before Lombard bought the Tasman Mortgages Group from Blue Chip, now named Northern Crest Investments, in July 2007. Lombard has already written off the $50,000 purchase price and the broking operation hasn’t undertaken any new business since October. Lombard said it has "been in dialogue" with IRD and has made a formal demand on Northern Crest under the warranties in the sale and purchase agreement.