Key Takeaways
- • ResMAE Mortgage Corp. originated at least $13 billion in high-interest subprime loans between 2005–2007 before collapsing during the financial crisis, receiving no federal bailout funds despite systemic exposure.
- • Citadel Investment Group acquired ResMAE's remaining assets and liabilities for $22 million in March 2007, after the company filed for Chapter 11 bankruptcy in February 2007 and ceased new loan originations in November 2007.
- • ResMAE's largest unsecured creditors included major financial institutions: CIT Group, Barclays, Merrill Lynch, Lehman Brothers, Deutsche Bank, Bear Stearns, JPMorgan Chase, Nomura Credit & Capital, and Morgan Stanley—illustrating the systemic interconnectedness of subprime lending.
- • Citadel-affiliated entities reported $2.03 million in lobbying expenditures between 2003–2008 and contributed at least $880,754 to political causes, with Barack Obama receiving $145,350 and the Democratic Congressional Campaign Committee receiving $134,650.
- • ResMAE was founded in 2003 by former Long Beach Mortgage Co. executives and operated from Brea, California, with backing from TH Lee Putnam Ventures (connected to Thomas H. Lee Partners and Putnam Investments).
Summary
ResMAE Mortgage Corp., ranked No. 24 among the "Subprime 25" companies examined by the Center for Public Integrity, exemplifies the rapid rise and collapse of specialty subprime lenders during the 2005–2007 origination boom. The company, founded in 2003 as the Residential Mortgage Assistance Enterprise, LLC, by veterans of Long Beach Mortgage Co., originated at least $13 billion in high-interest residential mortgage loans before filing for Chapter 11 bankruptcy protection in February 2007. Despite its substantial loan portfolio and the systemic importance of its creditor relationships, ResMAE received no federal bailout funds.
In March 2007, Citadel Investment Group, the Chicago-based hedge fund, agreed to acquire ResMAE's remaining assets and liabilities for $22 million, replacing an earlier agreement with Credit Suisse. The transaction allowed ResMAE to emerge from bankruptcy as a Citadel subsidiary. However, the company ceased funding new loans on November 6, 2007, effectively ending its origination operations. Ed Resendez, the co-founder and CEO, led the company through its asset sale to Citadel.
ResMAE's bankruptcy filing revealed extensive exposure across the financial system's largest institutions, listing CIT Group, Barclays, Merrill Lynch, Lehman Brothers, Deutsche Bank, Bear Stearns, JPMorgan Chase, Nomura Credit & Capital, and Morgan Stanley as major unsecured creditors. This creditor roster underscores how deeply integrated subprime mortgage originators were with investment banks and financial intermediaries, amplifying contagion risk during the crisis.
Between 2003 and 2008, Citadel-affiliated entities reported $2.03 million in lobbying expenditures, while contributing at least $880,754 to political recipients. Barack Obama received $145,350 and the Democratic Congressional Campaign Committee received $134,650, reflecting broader industry engagement with political decision-makers during the subprime era. The company's financial backer was TH Lee Putnam Ventures, a private equity firm with connections to Thomas H. Lee Partners and Putnam Investments, highlighting the role of private capital in funding mortgage origination platforms.
In March 2007, Citadel Investment Group, the Chicago-based hedge fund, agreed to acquire ResMAE's remaining assets and liabilities for $22 million, replacing an earlier agreement with Credit Suisse. The transaction allowed ResMAE to emerge from bankruptcy as a Citadel subsidiary. However, the company ceased funding new loans on November 6, 2007, effectively ending its origination operations. Ed Resendez, the co-founder and CEO, led the company through its asset sale to Citadel.
ResMAE's bankruptcy filing revealed extensive exposure across the financial system's largest institutions, listing CIT Group, Barclays, Merrill Lynch, Lehman Brothers, Deutsche Bank, Bear Stearns, JPMorgan Chase, Nomura Credit & Capital, and Morgan Stanley as major unsecured creditors. This creditor roster underscores how deeply integrated subprime mortgage originators were with investment banks and financial intermediaries, amplifying contagion risk during the crisis.
Between 2003 and 2008, Citadel-affiliated entities reported $2.03 million in lobbying expenditures, while contributing at least $880,754 to political recipients. Barack Obama received $145,350 and the Democratic Congressional Campaign Committee received $134,650, reflecting broader industry engagement with political decision-makers during the subprime era. The company's financial backer was TH Lee Putnam Ventures, a private equity firm with connections to Thomas H. Lee Partners and Putnam Investments, highlighting the role of private capital in funding mortgage origination platforms.
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