Big mortgage deals
As the US mortgage market crumbles, properties are switching hands. Two recent transactions bear this out.
First, Dutch bank ABN Anro announced it is selling its US mortgage business to Citigroup. Terms of the deal were not announced, but Citigroup will take over a portfolio of $9 billion in mortgages. The mortgage group supports and services third-party brokers. ABN Anro will retain retail mortgages through its LaSalle Bank chain in the Midwest.
ABN Anro has been selling off assets, a Wall Street Journal article ("Dutch Bank ABN Amro to Sell U.S. Mortgage Group to Citigroup," 1/22/07) ) notes: "ABN Amro in the past year sold its real-estate arm Bouwfonds, its futures and options business and a stake in a Hungarian bank as those were considered non-core assets."
Meanwhile, UK bank Barclays is buying the US-based EquiFirst mortgage company. EquiFirst specializes in subprime mortgages, loans to riskier clients. That sector has been hit especially hard by the drop in the housing market. The deal is for $225 million. Like the ABN Anro mortgage group, it works through local mortgage brokers.
Barclays is in the process of consolidating such accounts, with the possible object of selling them off in turn. In June 2006, Barclays acquired HomeEq Servicing from Wachovia, in a $469 million deal. HomeEq was originally The Money Store, until acquired by First Union Bank in 1996. First Union bought Wachovia in 2001, and then adopted its name.
Investment banks have been snapping up the assets of the now weakened mortgage firms. In October 2006, Bear Stearns Residential Mortgage bought Encore Credit, a wholesale mortgage operation (price undisclosed). In September, Merrill Lynch acquired First Franklin, a mortgage franchiser for $1.3 billion. In August, Morgan Stanley bought Saxon Capital, a servicer of residential mortgage, for $707 million,
