Dana Capital closes the doors

Dana Capital, a large Irvine, California-based nationwide lender closed its doors the other day. The company, facing regulatory action finally ceased operations. There had been rampant rumors about the company’s health as broker after broker reported not being paid on loans funded by Dana Capital for the past several months.

The way Dana Capital worked is that they would take loans from unlicensed mortgage brokers and then fund them under their umbrella, and then pay the unlicensed originator a percentage of the total fee of the loan. For example, if we spoke with someone who wanted a loan in Ohio (where we are not licensed) instead of telling that person "we can’t lend there" we would just take the loan and run it through Dana Capital. That way we could still "do" the loan even though we weren’t licensed there.

In all honesty we tried this once and it was one of the worst decisions we made. It took 3 months to close the loan, Dana Capital was non-responsive, cagey and just very obtuse in dealing with us. It took another 3 months to get paid on the loan. We chalked it up to a good learning experience and just decided that we were going to go about it the right way and get our own licenses for where ever we wanted to lend. We didn’t want to depend on anyone else ever again.

I feel for all of these brokers who were anticipating checks for north of $50,000 who aren’t going to see a dime – but they never should have gotten in bed with such a dog of a company. Dana Capital has a horrible reputation in our industry of being shady, engaging in highly questionable activities, and being a bad business partner. Most people that worked with them knew this and just accepted it because they wanted the money.

I am glad that Dana Capital is closed – the company was bad for our industry. Although there are rumors that Mr. Dana Smith, the owner of Dana Capital, has grabbed his head attorney, best operations guys, and opened, you guessed it, another mortgage company under another DBA.

UPDATE: The new entity is DCG Home Loans doing business as Sage Credit.