Bay Finance shuts down

Bay Finance Co., the mortgage lending subsidiary of The Commerce Group Inc., will stop originating loans immediately, the company said Tuesday night.

The Commerce Group intends to retain the existing loan portfolio, valued at about $20 million.

"Over the last year, we have made a concerted effort to focus our energy and resources on our core property and casualty insurance business," said Gerald Fels, the president, chief executive and chairman of Commerce Group, in a statement.

Mortgage lending has become an increasingly tough business as investors shy away from purchasing loans on the secondary market and banks pull back on credit lines lenders often use to fund loans. Dozens of mortgage lenders have gone out of business in recent months, with American Home Mortgage Investment Corp., Aegis Mortgage Corp. and HomeBanc Mortgage Co. among the most recent to shut down operations.

Bay Finance will process and complete all pending loan applications. (AP)