RMK Financial Corp., which also does business as Majestic Home Loan, is closing its doors.
The California-based wholesale lender, which was founded in 1997, laid off most employees in mid-January via Skype and closed shop on January 31, sources familiar with the matter said. Over 60 employees were impacted.
The company did not respond to multiple requests for comment.
According to employees let go, the announcement that the lender would be shutting its doors came unexpectedly. Those impacted by layoffs in mid-January received their final paycheck, but did not receive severance pay.
At the end of 2022, Majestic was actively bringing on new employees. In December, the company brought on board close to a dozen account executives.
In a LinkedIn post, Michele Turcich, a national account executive at Majestic, noted that the company made the decision to shut down due to a "legacy issue" and wished the "team the best of luck in their future endeavors."
While the company wouldn't confirm what the "legacy issue" was, the lender has faced a slew of enforcement actions from state and federal regulators spanning over half a decade.
In 2021, the lender entered into a consent order with Oklahoma's department of consumer credit, which found that they failed to provide a comprehensive list of all active mortgage originators, and did not submit quarterly financial conditions as required by the state. A few years prior, in 2016, Majestic settled with the state of Kentucky for using four unregistered loan processors, violating state law.
Meanwhile, eight years ago the lender was slapped with a $250,000 fine from the Consumer Financial Protection Bureau for false advertising. At the time, the CFPB claimed that through marketing the lender led consumers to believe that the company was affiliated with the U.S. government.
RMK allegedly mailed print advertisements to more than 100,000 consumers in several states, using the names and logos of the Department of Veterans Affairs and the Federal Housing Administration in a way that falsely implied that the advertisements were sent by the VA or FHA, or that the company or the advertised mortgage products were endorsed or sponsored by the VA or FHA.
