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A former loan officer with Phoenix-based Suburban Mortgage Inc. said Friday that all of the company’s employees were laid off on Aug. 26th, when they received an email from the company’s president saying the business was shutting down.
“We didn’t get a phone call,” said the former loan officer, who requested anonymity. “It was just an email to everyone at the company.”
The former loan officer, who shared with NMP the final emails from the Suburban executives, said employees were locked out of Suburban’s loan origination system, Encompass, early that morning, and that access to the company email system was blocked at 4:30 that afternoon.
“All loans locked prior to today will be processed, underwritten and closed,” Human Resources Manager Clara Mitchell wrote in an email that followed the one sent by company President Ron Martin. “The loan officer will be compensated as agreed to in their commission agreements.”
Mitchell’s email added that compensation will depend on a loan officer's “cooperation in working with the borrower and SMI staff as needed. Unlocked loans including TBD loans will not be completed, and will be withdrawn.”
Phone calls to the company’s top executives — including to Martin; Executive Vice President & Chief Loan Officer Greg Daly; and Treasurer Vernon Rupp — seeking comment and clarification were not immediately returned.
The email from Martin, sent to “all offices” at 8 a.m. on Aug. 26, had the subject line: “Suburban is exiting the mortgage business,” and read as follows:
“Hi Suburban Team, With a heavy heart, I am sending this email. We have feared, for some time, the economic conditions that have been brewing for the last several years. As you all know, the current slowdown in mortgages has been swift and painful for many months."
“We have had to make hard decisions about this business,” Martin’s email continued. “We have decided to exit the mortgage business and retire this 34-year-old company. It's been a fantastic journey that has always taken a team. My sincere thank you for being on this journey. I hope your time here is looked back on fondly.”
He then adds, “This means we are laying off everyone at the company today.”
Martin also said in the email that the company retained “a small group” to help with closing the business. “If you have not been designated and communicated with regarding this transition team, today is your last day. This serves as notice,” he wrote.
He added that Mitchell would email instructions “on how to deal with the rest of this day. Our sincere thanks for your time and work and efforts. We wish you well.”
The email is signed simply, “Ron.”
Mitchell’s email followed at 8:07 a.m., laying out the next steps. It included:
- Instructions for employees to clock out for the final time. “Any days not marked will be unpaid,” she said.
- That payroll would be directly deposited for all hours worked from 8/8/22-8/26/22. She said the payment would include all "unpaid vacation," but that unused sick time and paid time off “will not be paid out.”
- That all medical and vision benefits would end one week later, on Aug. 31. Mitchell added that all voluntary supplemental benefits – including “life insurance, extra life insurance, critical illness, cancer policies, etc.” – would end on the last day of employment, and that they are not “portable or convertible.”
- That all employees with current health benefits will receive a COBRA notice within 14 days to continue coverage of medical, dental and/or vision coverage.
- Instructions for collecting personal property and returning company property.
- Instruction for money remaining in flexible spending accounts or health savings accounts.
- That all employees will receive a 401(k) termination distribution packet.
- That all employees may be eligible for unemployment benefits, and that they should contact their local unemployment office for information.
“Once our insurance policies are canceled, you would need to find other coverage. A great alternative would be the Marketplace at www.healthcare.gov,” Mitchell said in the email.
Her email doesn’t mention any severance package. It is not known how many employees the company had at the time it closed.
According to its LinkedIn profile, Suburban employed between 51 and 200 workers. The company was founded in 1988 and specialized in residential mortgage loans.
The former loan officer said the company’s fortunes started to sour in April, when mortgage rates rose above 5%.
“It was kind of sudden,” the former employee said. “Refis went away, and Suburban was always more purchase than refis. But with the increase in interest rates, affordability became an issue.”
“We didn’t expect the purchase business to drop off so quickly,” the former loan officer added.