A subprime mortgage brokerage that relocated to the city during the height of the housing boom has closed and filed for bankruptcy.
Two years after MEM Financial Services established a headquarters near the corner of State and Ferry streets, it filed Friday for Chapter 7 liquidation in U.S. Bankruptcy Court in Albany.
In early 2006, MEM President Mark McLeod came to Schenectady promising to create 100 jobs within 18 months. But the housing boom by then had peaked, and the implosion of the subprime loan industry followed in summer 2007.
“It’s a tough time to be in the mortgage market,” said MEM attorney Matthew Mann.
Around the time MEM moved from Clifton Park to Schenectady, McLeod employed 41 and his brokerage had generated $150 million in revenues since being founded in 1999. The company also operated under the Lending Factory moniker.
The closure of MEM marks one of the Capital Region mortgage industry’s biggest single losses since the August 2007 collapse of Guardian Loan Co., another Clifton Park subprime mortgage brokerage, which employed over 200 at its peak. In its Chapter 7 petition, MEM cited $848,000 in debts and $3,000 in assets.
McLeod purchased the 20,000-square-foot building at 202 State St., which previously housed the Spencer Business School. His budget to buy and renovate the building was $1.3 million, according to the Schenectady Metroplex Development Authority.
Metroplex had offered MEM a $54,000 grant to offset the cost to lease parking for employees in a downtown lot. However, the brokerage never applied for that incentive.
“Basically, as a mortgage broker, his business just dried up … The building is for sale now and it was completely redone,” said Metroplex Chairman Ray Gillen.
MEM was licensed in New York and Florida. Utilizing more than 120 mortgage lenders, the brokerage offered purchase money and refinance, new construction and home equity loans for the conventional, jumbo, modular and manufactured housing markets.
Before closing, MEM moved its Schenectady operations to an existing office on Warren Street in Glens Falls. MEM in March changed its mortgage brokerage certificate to the Glens Falls address, according to the state Department of Banking. Mann was not certain how many people MEM employed or when it closed.
MEM in 2004 became a public company by purchasing Vision Real Estate Management in Albany. Three months after Metroplex announced MEM’s move to Schenectady, the brokerage announced Daniel Duffy had acquired a controlling interest in the brokerage.
A news release announcing the deal said Duffy would serve as MEM’s chairman, president and CEO. But it also noted that the “operating business of MEM Financial Solutions in lieu of the Lending Factory has been renconveyed to the companies’ former president Mark E. McLeod.”
“In the coming months our shareholders can expect to see a vast array of changes, including a name change, additions to the management team and implementations of a new business plan,” Duffy said in the March 2006 news release.
The subprime industry collapsed less than 18 months later.