A deal has been reached for the mortgage lending business of a investment banking firm to be acquired by a fast-growing mortgage company.
Descap Mortgage Funding LLC announced in early 2011 that it had acquired ClearPoint Funding Inc. At the time, ClearPoint had a staff of a hundred people and was licensed in 12 states and Washington, D.C.
ClearPoint says it operates with “100 percent paperless systems.” More than half of its production staff operate out of virtual offices across the country.
Shortly after the acquisition was completed, Descap President Mark Pappas said that one of the first priorities for Marlborough, Mass.-based ClearPoint “is a significant geographic expansion through targeted recruitment of experienced mortgage staff.”
Descap was formed by parent Gleacher & Company Inc. just prior to the acquisition.
A year later, however, Gleacher disclosed that ClearPoint had begun experiencing liquidity constraints as a result of the rapid expansion strategy coupled with an unanticipated decline in purchases by the primary lender that acquires its loans — forcing it to come up with cash to clear its warehouse lines.
“In March 2012, ClearPoint was found to be in default under certain provisions of each of its three warehouse lines of credit concerning covenants relating to liquidity, net profit/loss and certain notices for various periods from October 2011,” Gleacher said at the time. “These defaults also resulted in cross-defaults by ClearPoint under each warehouse line.”
In Gleacher’s fourth-quarter earnings report released Friday, it noted that since facing the liquidity constraints during the first half of last year, ClearPoint has been operating near break-even levels.
Now, ClearPoint is changing hands once again.
The earnings report indicated that the New York-based investment banker reached an agreement Thursday with Ocwen Financial Corp. subsidiary Homeward Residential Inc. to acquire all of ClearPoint’s assets.
The deal is expected to close during the first quarter.
While no deal terms were disclosed, the report indicated that a $5 million loss would be recognized as part of the sale.
The ClearPoint transaction is one of several deals recently negotiated or closed by Atlanta-based Ocwen.
Ocwen acquired Homeward Residential in December, while it acquired the servicing assets of Saxon Mortgage Services Inc. from Morgan Stanley in April 2012.
Ocwen Loan Servicing LLC bought Litton Loan Servicing LP from Goldman Sachs Bank in 2011 and acquired HomEq Servicing in 2010 from Barclays Bank PLC.
Ocwen expects to close on its acquisition of Genworth Financial Home Equity Access Inc. in the first quarter. In addition, Ocwen won a bid in October to acquire Residential Capital LLC’s mortgage servicing and origination platform assets out of bankruptcy.
