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Multifamily Lenders Dominate Recent Mortgage M&As

Mergers and acquisitions continue to be strong among smaller mortgage companies, pushing some above $500 million in annual originations. Other M&As involve multifamily lenders that are now or will be soon doing more than $1 billion in annual originations.

At the top is the acquisition of Deutsche Bank Berkshire Mortgage, formerly a subsidiary of Deutsche Bank, by Ranieri Real Estate Partners LP, a real estate financial services company, and WL Ross & Co. LLC.

Berkshire Mortgage, which has been renamed Berkeley Point Capital, did over $3 billion in multifamily originations last year, noted James B. Lockhart III.

The company originates multifamily loans for Fannie Mae, Freddie Mac and the Federal Housing Administration. It is the second largest originator of Fannie Mae loans and services a $29 billion multifamily loan portfolio. Founded in 1988, the company has 175 employees and operates out of primary offices in Bethesda, Maryland; Boston, Massachusetts, and Irvine, California. Additional offices are in Dallas, Los Angeles, Nashville and Seattle.

A high-quality acquisition of this scale within the multifamily sector,” said Jon Vaccaro, head of real estate at Ranieri Partners and founder of Ranieri Real Estate Partners, “is unique and rare. The new Berkeley Point provides us with an excellent in-place team, that we know well and is capable of much more. With the benefit of the strong WL Ross and Ranieri partnership, we believe Berkeley Point is poised for growth.”

Jeffrey C. Day, who served as chief executive officer of Berkshire Mortgage and will serve as CEO of Berkeley Point, said the new owners “believe the current market dynamics, which favor renting over homeownership, and the unique capabilities of our team position the business well for long-term success.”

In another merger that will pay off with more than $1.4 billion in annual originations, Enterprise Community Investment Inc.’s multifamily mortgage finance business and Bellwether Real Estate Capital LLC have combined to expand their geographic reach, product offerings and ability to serve multifamily and commercial real estate borrowers across the country.

Bellwether’s production in 2011 totaled $1.03 billion, and the multifamily mortgage finance unit of Enterprise, which merged with Bellwether, closed $157 million in loans in 2011. The expected combined production of Bellwether Enterprise in 2012 is approximately $1.4 billion, with an eventual target of more than $3 billion.

The new company, Bellwether Enterprise Real Estate Capital LLC, will be headquartered in Cleveland, where Bellweather Real Estate Capital has been based, with originators located in 13 cities nationwide. Enterprise’s multifamily mortgage finance business was based in Columbia, Md.

As a leading national affordable housing organization — instrumental in the creation of the Low Income Housing Tax Credit — Enterprise has invested $11 billion nationwide in 300,000 affordable homes. With a portfolio exceeding $4.2 billion and offices throughout the Midwest and Southeast, Bellwether has provided a variety of loan products for investment real estate, placed through a wide range of institutional investors, including life insurance companies, pension funds, government agencies and banks. The merger moves Enterprise into the commercial real estate sector, expanding its business beyond affordable multifamily and community building finance.

“Bellwether Enterprise looks forward to creating flexible financing solutions for our customers across all commercial property types,” said President Ned Huffman, a former Bellwether Real Estate Capital principal & executive managing director. “The newly-combined teams will total 90 employees and offer financing expertise in the multifamily housing, office, retail, industrial, hotel and healthcare lending markets.”

San Angelo, Texas-based Crockett National Bank has purchased for an undisclosed sum a controlling interest in San Antonio-based Legacy Mutual Mortgage, which closed $440 million in home loans last year and is on track to exceed $600 million in originations this year as it opens its offices in the Lone Star State.

Because of the bank’s extensive background in residential and commercial real estate lending, Crockett officials say the buyout of Legacy Mutual should complement the bank’s operations.

“Crockett’s real estate background and Legacy Mutual’s mortgage leadership fit very well together,” said Legacy Mutual President Dan Diepenhorst. “Our management teams are a great fit with regard to aspirations, work ethic, and the love for doing Texas real estate finance. We expect great things through the combination of these two companies.”

Two Florida-based mortgage lenders — Sarasota-based Gulf Atlantic Mortgage and Lakewood Ranch-based Blue Skye Lending — expect to gain from each other’s strengths as a result of Gulf Atlantic’s merger into Blue Skye.

“We feel Blue Skye Lending has the best platform and systems available for our clients and potential clients,” said Geoff Allison, former owner of Gulf Atlantic Mortgage, who will serve as the branch manager for the new entity’s Sarasota office. “We will be a viable alternative to the banks in our ability to provide the lowest rates and lowest costs on loans.”

“Blue Skye Lending,” said Leslie Swart, one of Blue Skye’s managing partners, “is pleased to join with such a highly respected and quality company as Gulf Atlantic Mortgage.”

Pittsfield, Mass.-based Berkshire Bank has acquired Needham, Mass.-based Greenpark Mortgage Corp. and hired its entire mortgage team as well as the mortgage company’s two founders, Paul Gershkowitz and Patty O’Meara, who will join the bank as first vice presidents. Greenpark Mortgage now operates as a division of Berkshire Bank.

“This partnership,” said Berkshire President and CEO Michael P. Daly, “enhances our residential lending capabilities and our efforts to expand our reach into eastern Massachusetts. We look forward to carrying on the solid practices, processes and customer service of Greenpark Mortgage, which have made them so successful and which complement well our culture of community mortgage lending.”

Charlotte, N.C.-based Tree.com, Inc. has sold substantially all of the operating assets of its Home Loan Center Inc. business to a wholly-owned subsidiary of Riverwoods, Ill.-based Discover Financial Services.

“Discover is acquiring a proven operating platform that we can scale by leveraging our brand and lending expertise,” said Carlos Minetti, president of consumer banking and operations for Discover. “This will enable us to expand our line of banking products and provide home loans to consumers.”

Doug Lebda, chairman and CEO of Tree.com, whose brands include Lending Tree, said the transaction completes his company’s transition to a focused performance marketing company.

“Tree.com will now be able to focus solely on our core lead generation business powered by our world-class marketing team,” he said, explaining, “Discover has the brand and experience to scale the Home Loan Center operating platform and we’re looking forward to a long relationship with them as a customer of LendingTree. The completion of this transaction is beneficial for both companies.”

Discover paid an aggregate of $45.9 million for the assets, including payments made prior to the closing that were applied to the closing price. A portion of the amount is being held in escrow pending the discharge of certain contingent liabilities not assumed by Discover related to loans previously sold to secondary market investors. An additional $10 million of purchase price will be due on the first anniversary of the closing, subject to certain conditions being satisfied.

Dallas-based Highlands Residential Mortgage Ltd. is purchasing substantially all of the assets of ViewPoint Bankers Mortgage Inc., a wholly-owned subsidiary of Plano, Texas-based ViewPoint Bank, N.A.

The acquisition, which is expected to close in the third quarter of this year, includes ViewPoint’s loan pipeline and its existing construction loan portfolio, together with certain furniture, fixtures and equipment. Highlands also will assume substantially all of ViewPoint’s loan production office leases and its equipment leases, and hire no less than 95 percent of current ViewPoint employees and satisfactorily release ViewPoint from certain employment contracts. And Highlands will make earn-out payments to ViewPoint.

Following completion of the sale, the agreement provides an opportunity for ViewPoint Bank to partner with Highlands to continue providing the bank’s customers with residential mortgage services. ViewPoint Bank will continue to serve its mortgage banking company customers through its Warehouse Purchase Program.

Ann Arbor, Mich.-based University Bank, which originated more than $265 million in loans last year, has acquired an additional 37.5 percent stake in University Lending Group LLC, which originates residential mortgages for sale to secondary market investors. The bank, a unit of University Bancorp Inc., has owned slightly more than a 50 percent stake in University Lending since the lender began operations in May 2008.

University Lending expects to originate more than $150 million of mortgages during the first half of 2012 and some $300 million for the year, according to a spokesperson.

In other M&A activity, New York-based private investment firm Long Ridge Equity Partners is investing $25 million in Stonegate Mortgage Corp., an independently owned mortgage lender founded in 2005, according to Whit Clay, a spokesman for Stonegate.

Stonegate, which is based in Fishers, Ind., outside Indianapolis, plans to use the capital to expand its portfolio of mortgage servicing rights and its correspondent and wholesale loan origination channels, he said. The company also will pursue expansion of its retail branch network.

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