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Mortgage Investors Corp. lays off nearly 500, stops making new loans

Bill Edwards works in his office on St. Petersburg's Central Avenue. Mortgage Investors Corp. is the nation's largest refinancer of VA loans.

JAMES BORCHUCK | Times (2011)

Bill Edwards works in his office on St. Petersburg's Central Avenue. Mortgage Investors Corp. is the nation's largest refinancer of VA loans.

ST. PETERSBURG — Mortgage Investors Corp. laid off nearly 500 workers, including 256 in its St. Petersburg headquarters, and stopped making new home loans in a stunning pullback Monday.

Bill Edwards, a well-known local businessman and chairman of MIC, blamed the near-shutdown on federal regulations under the Dodd-Frank Act that are going into effect Wednesday. His company, one of the biggest refinancers of home loans for veterans, doesn't have the technological capacity to comply, he said.

All told, the 75-year-old company will cut 476 people. That leaves a staff of fewer than 40 at its W Central Avenue offices primarily to wind down operations in 26 states where it has been marketing loans, to service existing loans and to handle customer service.

Many of the affected workers have been with the company for years.

"It's been a hard day, one of the hardest days of my life quite frankly," Edwards said in an interview Monday morning. "It's not a pretty day."

According to a layoff notice filed with the state, 212 of the St. Petersburg job cuts took effect Monday and the remaining 44 will occur by Nov. 30. Nearly 200 of the jobs were loan processors and appointment setters.

MIC set aside more than $5.5 million for two-months severance pay for affected employees along with continued benefits and credit for accrued vacations.

Mortgage Investors has been hammered with complaints from customers, both for misleading sales techniques and for allegedly calling millions of people on the federal Do Not Call registry. In June, the Federal Trade Commission levied a civil penalty of $7.5 million on the home lender, the largest fine ever for a violation of the Do Not Call rule.

The FTC said telemarketers from Mortgage Investors misled service members that the company was affiliated with the U.S. Department of Veterans Affairs and that they could receive low-interest, fixed-rate mortgages at no cost. In reality, regulators said, the company was only offering adjustable rate mortgages that left consumers liable for higher payments with rising interest rates. It also required consumers to pay closing costs.

Edwards said neither bad publicity surrounding the FTC inquiry nor other ongoing government pressures had anything to do with the decision to stop selling new loans. "There is no investigation that I'm aware of that is going on," he said.

When Mortgage Investors last clipped its wings — cutting about 325 jobs in July — Edwards blamed a slowdown in refinancing demand as interest rates were rising.

This time, he said, demand isn't the issue. The sole reason to stop making loans was that his company could not afford nor figure out how to comply with Dodd-Frank rules that have been foreshadowed for three years.

The Dodd–Frank Wall Street Reform and Consumer Protection Act, signed into law by President Obama in July 2010, established sweeping changes to financial regulation in the wake of the 2008 financial crisis. Among the changes are new provisions affecting mortgage underwriting and ensuring a borrower's ability to pay.

"We've attempted to decipher all 2,300 pages of the Dodd-Frank Act," Edwards said. "Our entire team has dedicated enormous energy to reviewing all aspects of the new regulations that are now coming into effect. Sadly, we've concluded that it's no longer cost-effective for us to originate new loans for our nation's veterans, nor do we understand how to implement these new government guidelines."

Citing one estimate that Dodd-Frank could take $28 billion out of the economy, Edwards blasted the law as "crippling a lot of people trying to get work done."

By ending MIC loans, he said, "veterans lost a critical lifeline to affordable, low-interest rate mortgages."

Earlier this year, Edwards said he planned to retire and arranged a sale of Mortgage Investors to Tampa-based HomeBancorp. That deal fell apart, however.

Beyond operating the mortgage firm, Edwards has a music production company, owns the Club at Treasure Island and runs the city-owned Mahaffey Theater. He bought downtown St. Petersburg's BayWalk complex and is in the midst of a massive renovation with plans to open it as the Shops at St. Pete next year.

He is the largest donor to the Bill Edwards Foundation for the Arts, the fundraising arm for the Mahaffey Theater. Edwards also recently donated $300,000 to a Midtown shopping center to help lure Walmart. He ranks among the top contributors to Gov. Rick Scott's re-election campaign, donating $500,000.

He said the near-closure of MIC won't affect his ability to fund other businesses and nonprofits "one iota."

When asked how stifling his main source of new revenue has no bearing on his ability to spend more money, he replied: "I've been doing this a long time. I've saved a lot. I'm financially sound. My programs are financially sound.

"If I was pinching pennies, would I have given $7 million in severance packages?"

Edwards has amassed close to 90,000 square feet of real estate in six buildings around the main MIC offices at 6090 Central Ave., which once housed Raymond James Financial. He has two generators on hand to make sure loans still get processed should a hurricane hit.

Edwards isn't selling any property, however, saying he's sitting on the sidelines to see how the new government regulations play out in the industry.

"We've been in business 75 years and will probably be in business another 75 years long after I'm gone," he said.

Jeff Harrington can be reached at (727) 893-8242 or

Mortgage Investors Corp. lays off nearly 500, stops making new loans 10/14/13 [Last modified: Monday, October 14, 2013 10:11pm]
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