Mortgage Daily

Published On: May 7, 2004
Lehman to Sell Financial FreedomIndyMac to acquire reverse lender

May 7, 2004

By COCO SALAZAR

IndyMac Bank has reportedly signed an agreement to acquire a company that will make it the top reverse mortgage lender in the nation.

IndyMac Bancorp Inc. announced Wednesday that its banking unit — IndyMac Bank, FSB — signed a definitive agreement to buy reverse mortgage lender Financial Freedom Holdings Inc. for about $80 million. The purchase includes 93.75% of Financial Freedom’s outstanding shares of common stock and related assets from its parent company Lehman Brothers Bank, FSB and its affiliates.

The Pasadena-based thrift said Financial Freedom CEO, James Mahoney, will retain control over the remaining shares of common stock, which are subject to a separate stock purchase agreement with IndyMac Bank.

Financial Freedom, which is reportedly recognized as the top reverse mortgage lender in the nation, will operate as a subsidiary of IndyMac, according to the announcement. Its CEO and other senior management members have agreed to work for IndyMac following the deal’s closing, which must be approved by regulators, and is expected to close in the second or third quarter.

“We are very focused in staying in the single-family residential mortgage business and it’s a product (reverse mortgages) we did not currently have in our portfolio,” IndyMac spokeswoman Meg Wade told MortgageDaily.com. “We felt that Financial Freedom’s focus in this area, their demographic growth potential, worked very well with our strategic plan.”

Wade said that although IndyMac’s products are offered nationally, they are more popular in the West Coast states and the acquisition will help expand its business across all geographic areas.

The acquisition, IndyMac said, will also make it the number one-ranked provider of reverse mortgages in the country. Financial Freedom produced $976 million in reverse mortgage loans during 2003. The loan products, which are forecasted to have growth of over 60% in the near term and a 20% compounded annual growth through 2015, are nonrecourse, predominantly FHA-insured mortgages that allow homeowners age 62 or older to convert home equity to cash.

Financial Freedom could not release information about the transaction before IndyMac’s conference call later today.

Asked why Financial Freedom had decided to go under IndyMac’s arm, Wade said Lehman Brothers’ focus is not in the single-faimily residential mortgage market, “so they were just trying to get rid of a little piece of operation that wasn’t a significant portion of their operations. Whereas for us its a perfect fit with our focus and our attention.”

Lehman Brothers has reorganized key subprime units in a move that some observers say could shield them from some predatory lending laws, according to Inside B&C Lending.

IndyMac, which reported first quarter mortgage production of $6.9 billion, currently employs about 4,000 people, of which 3,000 are mortgage-banking employees, Wade said, adding that the business transaction will not negatively affect either Financial Freedom’s or IndyMac’s staff.


Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.

email: [email protected]

FREE CALCULATORS TO HELP YOU SUCCEED
Tools for Your Next Big Decision.

Amortization Calculator

Affordability Calculator

Mortgage Calculator

Refinance Calculator

FHA Mortgage Calculator

VA Mortgage Calculator

Real Estate Calculator

Tags

Pre-Approval Resources!

Making well educated decions in a matter of minutes and stay up to date on the latest news Mortgage Daily has to offer. Read our latest articles to stay up to date on what’s going on…

Resource Center

Since 1998, Mortgage Daily has helped millions of people such as yourself navigate the complicated hurdles of the mortgage industry. See our popular topics below, search our website. With over 300,000 articles, we are guaranteed to have something for you.

Your mortgages approval starts here.

Add 1-2 sentence here. Add 1-2 sentence here. Add 1-2 sentence here. Add 1-2 sentence here. Add 1-2 sentence here.

Stay Up To Date with Today’s Latest Rates

Mortgage

Today’s rates starting at

4.63%

5/1 ARM
$200,000 LOAN

Home Refinance

Today’s rates starting at

4.75%

30 YEAR FIXED
$200,000 LOAN

Home Equity

Today’s rates starting at

3.99%

3 YEAR
$200,000 LOAN

HELOC

Today’s rates starting at

2.24%

30 YEAR FIXED
$200,000 LOAN