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Merger Creates Portfolio Lender

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The acquisition of a billion-dollar producer will create a company that plans to make portfolio loans. On the menu are jumbo mortgages and investor loans.

In 1999, Wilmington Finance Inc. was launched by subprime veteran Jerry Schiano. By 2003, AIG subsidiary American General Finance Inc. acquired Wilmington. The unit would eventually employ 2,000 people and originate $15 billion.

Schiano wound up staying on board until May 2006, while Wilmington ended mortgage banking originations in June 2008.

By May 2008, Schiano had already launched another venture: New Penn Financial LLC. The company in initially focused on government business, while financial institutions were being targeted for affinity relationships.

Last year, Plymouth Meeting, Pa.-based New Penn originated $1.2 billion. Headcount at New Penn stands at 400 employees, and branch count is 20 offices.

New Penn acquired Stenton Mortgage in June 2008 and Universal Trust in September 2008.

Now, the three-year-old company has been acquired itself.

A news release Thursday indicated that Shellpoint Partners LLC completed its acquisition of New Penn. Terms of the deal weren’t disclosed.

Shellpoint was created as a venture between New Penn management and Ranieri Partners — a company founded by mortgage-backed securities legend Lewis S. Ranieri.

“In addition to its current product line, New Penn will expand mortgage originations to creditworthy borrowers who do not fit the government agencies’ underwriting criteria — for example, those seeking jumbo loans or second homebuyers and investors,” the statement said.

Shellpoint Co-Chief Executive Officer Bruce Williams noted in the news release that the private sector will need to step up its role in mortgage originations as the housing market recovers. Williams explained that many creditworthy borrowers don’t qualify for conforming programs, and a “significant opportunity” exists for “well capitalized specialty finance” firms that are not burdened with legacy loan portfolios.

Loans originated by New Penn will either be securitized or held in Shellpoint’s portfolio. By holding some of the loans as investments, “skin-in-the-game” requirements are satisfied, according to the release.

Schiano will continue as CEO of New Penn.

“Shellpoint’s capital and ability to develop proprietary products will greatly expand the options that we can bring to our borrowers in all of our business channels,” Schiano said in the statement.

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