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Burst of Mortgage Mergers

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Two firms have been busy recently scooping up regional lenders, while banks have also been buying mortgage businesses.

St. Louis-based Founders Mortgage LLC was acquired by acquired by PSM Holdings Inc. on July 1, a statement from Roswell, N.M.-based PSM indicated. The deal called for Founders President Peter Gubany to receive 250,000 shares of PSM, which is traded as an Over-The-Counter Bulletin Board stock. PSM shares closed at 70 cents today. PSM says it is licensed in 19 states.

Immediately after the closing, Founders was merged into PSM-subsidiary UCMC. Founders has eight employees and reportedly originates between $5 million and $7 million a month.

But that wasn’t the only acquisition PSM made. Also on July 1 it closed on the acquisition of Brookside Mortgage LLC and also merged it into UCMC. Greg Mahaney and Michael Thompson, the owners of the Tulsa, Okla.-based firm, were given 800,000 PSM shares as part of the transaction, which was originally announced in May. Mahaney became a board member of PSM.

Brookside’s production exceeded $120 million last year.

On March 24, PSM announced an agreement to acquire Boston-based American Trust Mortgage Inc. However, that deal — which was expected to close in April — apparently fell apart given that American Trust still operates under the same name, American Trust’s Web site makes no mention of a parent company, and no follow-up announcement was released by PSM indicating that the deal closed.

On March 15, PSM completed the acquisition of United Community Mortgage Corp. for 2.4 million PSM shares.

Another firm on an acquisition binge, Wintrust Financial Corp., announced in February the purchase of Woodfield Planning Corp.’s mortgage banking business — the sixth recent acquisition for the Lake Forest, Ill.-based firm. Then, in April, $14 billion Wintrust said subsidiary Wintrust Mortgage Corp. acquired assets of River City Mortgage LLC in Bloomington, Minn., in an all-cased transaction. River City, founded in 1994, reported nearly $500 million in production last year.

Homeland Security Capital Corp. entered the mortgage business with its $2.9 million purchase of substantially all of the assets of the former Default Servicing LLC, according to a July 6 statement. The acquired default-services provider became part of Homeland-subsidiary Fiducia Real Estate Solutions Inc. The deal included a contract with a “major U.S. bank” to provide liquidation services for over 1,400 properties.

A July 6 announcement indicated that First Community Bank agreed to acquire the assets of Palmetto South Mortgage Corp. The purchase calls for a three-year payout based on performance. The merger is expected to close by July 31.

Lexington, S.C.-based First Community said that the purchase of Palmetto South will be its fifth. The Columbia, S.C.-based company will continue to operate under the Palmetto South brand, while the firm’s president, Greg McCoy, will join Charlie Branham in leading the unit.

Pinnacle Home Mortgage Co. was acquired by Mortgage Services III LLC, according to a news release last month. Prior to the closing, Schaumburg, Ill.-based Pinnacle had been a wholesale lending customer of Bloomington, Ill.-based Mortgage Services “for years.”

A June 15 statement indicated that American Street Mortgage Co. became part of Lake Forest-based bank Baytree National Bank & Trust Co. Amir Syed is president of Chicago-based American Street.

In April, Community Trust Financial Corp. announced a cash-and-stock agreement to acquire Cimarron Mortgage Co. The deal was expected to close in May, though no confirmation of the closing was issued. Cimarron is a 20-year-old company based in Jackson, Miss., that originates through a network of independent banks and mortgage lenders and services $900 million in mortgages. Community Trust is a $2 billion bank-holding company based in Ruston, La.

New Penn Financial LLC reported in March that it acquired Preferred Trust, a company that operated 12 retail centers in the Southeast. The move doubled New Penn’s branch count to 24. Preferred Trust Chief Executive Officer Charles Rogers became a senior vice president of New Penn — which itself was acquired by Shellpoint Partners LLC in June.

Other reported mergers and acquisitions this year include the merger of New American Mortgage and Paramount Lending, both out of Charlotte, N.C.; Hampshire First Bank’s acquisition of Mortgage Planners of New England; Jones Lang LaSalle’s purchase of a portion of Primary Capital Advisors in Atlanta; and Andrew Elliot Group LLC’s acquisition of a controlling interest in Mortgage Man 2 LLC in Louisville, Ky.

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