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Broker Acquisitions Wanted

Broker Acquisitions Wanted

Recent mortgage mergers, acquisitions & corporate activity

March 30, 2007


photo of Coco Salazar
While a host of repurchase problems surfaced among a number of subprime lenders, a firm on the prowl for mortgage brokers made another acquisition.

But first, Genworth Financial Inc. said it expects to invest $100 million over the next two years to align high-growth business platforms and further solidify its global leadership in the mortgage insurance and payment protection insurance markets, among other initiatives.

The Richmond, Va.-based mortgage insurer has also identified approximately $220 million of cost savings and efficiencies over the same period.

Ameriquest has asked Roush Fenway to sell off the final two years of its NASCAR sponsorship contract, which expires in 2009, according to a NASCAR article.

Ameriquest spokesman Chris Orlando declined to give further comment beyond, “We are evaluating our marketing.”

The subprime lender announced, last November, the partnership with Roush Racing to serve as the primary sponsor of the No. 16 race car driven by Greg Biffle for the 2007 NASCAR NEXTEL Cup Series season. Ameriquest recently agreed to return the naming rights to the Texas Rangers’ stadium after originally signing a 30-year agreement in 2004.

Glancy Binkow & Goldberg LLP announced that just two weeks remain to become a lead shareholder plaintiff in a lawsuit against New Century Financial Corp.

LION Inc. announced its chairman and chief executive officer since Dec. 2003, Randall D. Miles, has resigned effective April 1. John A. McMillan was elected chairman and current president Dave Stedman will become interim CEO.

ECC Capital Corp., which previously unloaded its mortgage operations to Bear Stearns, today announced further delays in the filing of its 2006 annual report.

“Due to the complexities of the recent transaction involving the sale of ECC Capital’s mortgage banking business and the present environment in which ECC Capital operates, its outside auditors require additional time to complete their audit ,” the statement said.

Fulton Financial Corp. said it expects to recognize a first quarter pretax charge of $5.5 million due to losses that may be incurred through the repurchase of residential mortgages and home equity loans originated by its Resource Bank subsidiary. Repurchase requests are primarily from one investor for stated income loans to subprime borrowers.

Fulton said $22 million of its $194 million first quarter production was originated for sale under the 80/20 program.

OceanFirst Financial Corp. announced a $9.6 million reserve has been established for repurchased subprime loans originated by its subsidiary, Columbia Home Loans LLC. Senior executives learned Columbia officers failed to report to management higher-than-expected incidences of repurchase demands, according to the announcement.

OceanFirst subsequently discontinued subprime originations, which totaled $300 million last year — of which $148 million was 100 percent loan-to-value, according to the announcement. Some loan sale agreements were renegotiated to expand the default period with investors.

Fitch Ratings announced it upgraded Ocwen Financial Corp.’s Long-term Issuer Default Rating to B+ and issued a stable outlook. Strengths of Ocwen, which only services loans and is not exposed to current subprime lending dynamics, include stabilized core operating performance, ability to maintain market share, strong subprime loss mitigation capabilities and significant off-shoring and technology cost advantages.

But ratings are constrained by heavy customer concentration, lack of long-term revenue obligations and exposure to legal and regulatory risk as a subprime servicer, Fitch said. The agency said Ocwen’s strategy is more appropriate for a private equity or hedge fund than a service provider.

On Wednesday, Columbia Banking System Inc. (unrelated to the previously-mentioned Columbia Home Loans) announced definitive agreements to acquire Town Center Bancorp and Mountain Bank Holding Co. in two separate cash-and-stock transactions expected to close in the third quarter. Upon completion of the deals, Columbia’s total assets will near $2.9 billion and 51 branches.

The addition of Town, valued at $45.1 million, will give Columbia a presence in the Portland, Ore., metropolitan area and strengthen its southwestern Washington footprint, while the $60 million merger with Mountain will provide it with more products and services and larger lending capabilities, according to the announcement.

EverBank purchased the remaining interest in reverse loan originator BNY Mortgage Co. — a joint venture with The Bank of New York, according to a press release. BNY Mortgage will focus on retail, wholesale, correspondent and private label reverse mortgage lending including point of sale technology to post-closing servicing capabilities.

Impac Mortgage Holdings, Inc. announced outstanding repurchase requests at the end of the first quarter fell substantially from the end of last year. It also formed Arch Bay Group LLC for the purpose of acquiring, restructuring and remarketing non-performing mortgages.

“With the dramatic increase in the number of mortgage defaults and the pressure warehouse lenders are giving their clients to sell mortgage loans, we believe there is an attractive opportunity to be a buyer of these non-performing loans,” said Impac Chairman and CEO Joseph R. Tomkinson in the announcement.

Webster Financial Corp. announced today the sale of People’s Mortgage Corp. branch offices in Maryland and Connecticut to 1st Mariner Mortgage. Peoples employs 40 people and has originated over $1.5 billion in mortgages since 1995.

Acquisition firm W.J. Bradley Company Merchant Partners LLC announced that it will buy privately held residential mortgage broker SB Financial Inc. in a deal that will represent its 10th mortgage company acquisition in the past two years. SB reportedly originated over $650 million in primarily A and Alt-A loans last year, is licensed in nine states, and has five retail offices and 139 employees.

The portfolio companies of W.J., which consolidates small- and medium-sized mortgage brokers and banks, originated more than $5 billion in residential loans last year and operate in 40 states, with more than 1,600 loan professionals, according to the announcement.

“We continue to be bullish about the investment opportunity in the mortgage sector, despite the recent market challenges,” said President and Chief Executive William J. Bradley in the statement. “We intend to continue building our origination network, focusing on quality originators that have a competitive advantage and are led by disciplined entrepreneurs … who are looking for the capital and scale needed to grow.”

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