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Mergers Pick Up Steam

Mortgage News

At least four mergers are in the works — including the acquisition of two mortgage firms and two banks. At the same time, there were plenty of regulatory orders, securities settlements and class actions to be found.

But first, Sandra Bell has been named Chief Financial Officer of PHH Corp., a press release Monday said. Bell, who replaces Clair Raubenstine, previously served as CFO of the Federal Home Loan Bank of Cincinnati.

Irwin Financial Corp. and subsidiary Irwin Union Bank and Trust Co. entered an agreement with the Federal Reserve Bank of Chicago to improve capital and liquidity and strengthen board oversight of management, the Federal Reserve Board announced today. The agreement also calls for a diversification of funding sources and pre-approval for any capital outlays — including dividend payments.

In conjunction with the agreement, Irwin announced today it plans a $50 million rights offering to shareholders. Each board member, Chairman and Chief Executive Officer Will Miller, and members of Miller’s family are among the investors.

A consent order of prohibition was issued Thursday by the Federal Reserve Board against John H. Lohmeier, a former executive of Hinsbrook Bank & Trust in Oakbrook, Ill. The order was tied to allegations he used bank funds and non-public customer information from a bank computer server to start-up his own non-depository trust company.

A 2006 order against Bank of Tokyo-Mitsubishi UFJ Trust Co. was lifted by the Federal Deposit Insurance Corporation. The order was originally issued over weaknesses in the bank’s Bank Secrecy Act and Anti-Money Laundering compliance program.

Investment banking subsidiaries of Bank of America Corp. have agreed to a settlement with the Securities and Exchange Commission that would provide 5,500 individual investors, small businesses and small charities the opportunity to sell back to Bank of America up to $4.7 billion in auction rate securities. The auction rate securities market collapsed in February.

A class action lawsuit was filed on Aug. 5 against Freddie Mac on behalf of individuals who invested in the company’s securities from Nov. 29, 2007, to Aug. 5, 2008, an announcement Thursday from Tramont Guerra & Núñez, PA, said. Prospective class members may be able to recover investment losses through an individual securities arbitration claim filed with the Financial Industry Regulatory Authority. The case number is 08 CV 07281.

A class action lawsuit was filed in U.S. District Court for the Southern District of New York against Fannie Mae on behalf investors who purchased securities from Dec. 6, 2007, to Sept. 5, 2008, Federman & Sherwood announced last week. The defendants allege that Fannie issued a series of material misrepresentations that had the effect of artificially inflating the market price.

Fannie said on Friday that the FDIC’s insuring of funds held on behalf of mortgage-backed securities holders has prompted it to abandon its policy of collecting principal and interest payments daily.

The Mortgage Bankers Association issued a statement praising the FDIC’s move to clarify that escrow funds on deposit belong to the borrower and not the servicer.

Banco Santander will acquire Sovereign Bancorp Inc. in a stock-for-stock transaction, a statement Monday said. Spain-based Banco Santander is acquiring the 76 percent of Sovereign that is doesn’t already own for around $1.9 billion. The deal, which is subject to regulatory approvals, is expected to close during the first quarter of 2009.

“Given the unprecedented uncertainty in the current market environment and the challenges facing Sovereign, we believe this is the right transaction at the right time for Sovereign,” Sovereign director Ralph Whitworth said in the release. “We considered our options and this transaction very carefully and believe that it provides stability and upside potential for Sovereign.”

South Shore Savings Bank, headquartered in South Weymouth, Mass., will acquire The Cambridge Mortgage Group, according to a news release last week. After the acquisition, which is expected to close by January, the unit will become a wholly owned subsidiary of the South Shore and operate as Cambridge Mortgage Group LLC.

Cambridge will reportedly originate residential loans for sale on the secondary market and for South Shore’s portfolio.

The Federal Reserve Board approved the acquisition of Wachovia Corp. and subsidiaries Wachovia Bank, N.A., and Wachovia Bank Delaware, N.A., by Wells Fargo & Co., an announcement Sunday said.

Wachovia said it will forego shareholder approval for the issuance of preferred stock tied to Wells’ acquisition because Wachovia’s audit committee “determined that the delay necessary in securing shareholder approval for the consummation of the stock issuance would seriously jeopardize the financial viability of Wachovia.”

Hanover, Mass.-based Direct Finance Corp. has acquired First Call Mortgage Company Inc. of Andover, Mass., an announcement at MortgageOrb said. Around 40 employees are included with the deal, which will create the largest reverse mortgage company in New England.

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