Several of the biggest companies in the country own substantial mortgage operations. But the mortgage lender with the largest parent is on the verge of going it alone.
But first, the second-largest mortgage-associated company on the 2006 FORTUNE 500 was General Electric, which overall ranked No. 7 with revenues of $157.2 billion achieved in 2005, according to FORTUNE magazine. While the parent of WMC Finance Co. fell two spots from last year's ranking, it was the top diversified financials company and it also recently topped the list of America's Most Admired Companies for the sixth time in the past decade due to its ability to be ahead of the game and set the agenda of management ideas and practices that other companies follow.
Citigroup took the bronze medal amongst mortgage-related entities on the list by placing 8th out of all 500 companies. The parent of CitiMortgage and CitiFinancial kept the same ranking as last year due to an annual climb of 21 percent in its revenues to $131 billion. Profits for the New York-based lender were reported by the magazine at $24.6 billion.
In spot No. 12 was Bank of America Corp. with revenues of nearly $84 billion. The 33 percent increase in such figure moved the North Carolina-based lender up six slots from its ranking a year prior and bumped Berkshire Hathaway down to No. 13.
While revenue for Berkshire, whose umbrella of companies include Vanderbilt Mortgage and Finance Inc. and 21st Mortgage, was short of BoA's at $81.7 billion, its head honcho, Warren Buffet, was recently again named the second-richest person in the world.
JPMorgan Chase & Co. placed 17th with $79.9 billion in revenues. The Chase Home Finance parent ranked behind BoA as the third-largest in the commercial bank category.
Other mortgage-related entities in the top 10 percent of the list included Morgan Stanley at No. 30 with $52.5 billion in revenues, followed by Merrill Lynch, Goldman Sachs Group, and Wells Fargo, which was the second-largest mortgage originator amongst lenders that report production with volume of $366 billion.
Within the first one-fifth of the ranking was Wachovia Corp. with annual revenues of $35.9 billion, Lehman Brothers Holdings, Prudential Financial, American Express, and at No. 99 was Washington Mutual with revenues of $21.3 billion, according to the magazine.
The top 200 included the largest mortgage originator Countrywide Financial Corp., which jumped 28 spots from its ranking last year to No. 122 as its revenues of $18.5 billion improved 32 percent annually. U.S. Bancorp came in at No. 131, followed by homebuilders Pulte Homes, Lennar, D.R. Horton , and Centex, while Capital One Financial placed 187th.
Amongst the mortgage-related players placing in the 200 to 300 range were Bear Stearns, National City Corp., SunTrust Banks, Genworth Financial, Fidelity National Financial, homebuilder KB Home, and Principal Financial.
The top three mortgage players within the top 400 were Fifth Third Bancorp, KeyCorp and Golden West Financial.
The last fifth of the 500 companies on the list included Hovnanian Enterprises, NVR and Charles Schwab, according to the ranking.
But the crown for the top mortgage-related entity on this year's Fortune 500 went to General Motors. Despite net losses of $10.6 billion, which reflected a 478% downturn from the previous year, the current parent of Residential Capital Corp. retained its No. 3 position of out all 500 companies through revenues of $192.6 billion, which slipped half a percentage point from the previous year.
Around midyear 2005, GM transferred the ownership of Residential Funding Corp. and GMAC Mortgage Corp. to Residential Capital from General Motors Acceptance Corp. Residential Capital sought a stand-alone credit rating and was infused with $2 billion of equity by GMAC to reduce its leverage ratio.
The restructuring, separate capital structure, independent directors and other corporate governance arrangements, which came after the automaker reported a 2005 first quarter loss of $839 million, intended to facilitate enhanced liquidity and cost effectiveness of the financing of Residential Capital's mortgage operations, while separate liquidity and funding of Residential Capital would benefit GMAC through reduced funding requirements for its residential mortgage operations.
Recently, GM announced it agreed to sell a 51 percent controlling interest in GMAC for $14 billion over three years to a consortium of investors.
Yesterday, Residential Capital announced $3.5 billion in bond offerings, which it plans to use to repay all domestic borrowings from GMAC. That move will pave the way for the Minneapolis-based company to operate as an independent entity and avoid having its ratings dragged down by GM's woes.