Financial Week reports:
Donald Trump has pulled the plug on Trump Mortgage less than two years after its launch.Donald Trump the real estate expert.
Plagued by bad timing and the disclosure that the firm’s chief executive had inflated his credentials, the mortgage brokerage never came close to reaching its financial goals. Another reason the company stumbled is that it expanded too quickly, instead of taking the time to build relationships with brokers and lenders.
“You have to walk before you can run,” said Melissa Cohn, owner and chief executive of Manhattan Mortgage. “Not just come out with a big splashy ad campaign.”
Other mortgage companies are also facing hard times as the housing market craters.
American Home Mortgage Investment shut down nearly all of its operations earlier this month and then promptly filed for bankruptcy protection after its credit was cut off. The company said it would lay off 6,250 employees.
Mr. Trump down¬¬played his role in Trump Mortgage. He said that he didn’t have an ownership stake in what amounted to a mere licensing deal. “The mortgage business is not a business I particularly liked or wanted to be part of in a very big way,” he said.
That’s a different tune than the one he was singing a year ago. After a quiet opening in late 2005 at Mr. Trump’s headquarters at 40 Wall St., he officially launched the company in April 2006 at a gala at Trump Tower. Also onstage was chief executive E.J. Ridings, an acquaintance of Donald Trump Jr. who came up with the idea for the company.
Shortly thereafter, Mr. Trump told CNBC’s Maria Bartiromo: “I think it’s a great time to start a mortgage company.… [And] who knows about financing better than I do?”
Riding a wave of popularity thanks to his TV show, The Apprentice, he joked that if the company wasn’t a big success, Mr. Ridings would be “fired.”
Those words came back to haunt Mr. Trump late last year when Money magazine exposed exaggerations in Mr. Ridings’ company biography. While he claimed to have been “a top professional at one of Wall Street’s most prestigious investment banks,” his tenure consisted of a three-month stint at Morgan Stanley, including six days as a broker. Mr. Ridings could not be reached for comment for this story.
