HomeBridge Acquiring Prospect Mortgage

In a move that signals further consolidation in the mortgage origination business, independent mortgage lender HomeBridge Financial Services Inc. is acquiring the operating assets of Prospect Mortgage from Prospect Holding Co.

Terms of the deal – which is expected to close in January 2017 – were not divulged.

As a result of the acquisition, HomeBridge will become one of the largest nonbank mortgage lenders in the U.S. The company will be able to originate loans nationwide with approximately 900 retail mortgage loan originators in nearly 250 branches.

HomeBridge will continue to operate its two wholesale divisions, ultimately employing more than 3,000 full time associates, the company says in a press release.

“In today’s mortgage market, size, capital, liquidity and product diversity are critically important to long-term growth and success,” says Peter Norden, CEO of HomeBridge. “Specifically, our access to capital will improve, impacting our funding capabilities and our ability to increase our presence in existing and new markets. We will remain an entrepreneurial, flexible and nimble mortgage banker by effectively balancing profitability and volume, while continuing our commitment to operating in compliance with the current mortgage lending regulatory landscape.”

Michael Williams, chairman and CEO of Prospect Mortgage and the former president and CEO of Fannie Mae, will remain with HomeBridge in an advisory role for the immediate future.

“This arrangement creates a true loan production powerhouse that should become the nation’s premier non-bank mortgage company,” Williams says in the release. “I expect a smooth transition because of the similarities in corporate cultures at HomeBridge and Prospect, including strong leadership, a talented workforce and a profound commitment to excellence in everything we do.”

Prospect Mortgage last made news on MortgageOrb in November 2015 when it was announced that the firm would pay a $7.4 million penalty and about $2.8 million in restitution to settle allegations brought by the Multi-State Mortgage Committee (MMC), a consortium of 50 state mortgage regulators, that the company failed to disclose and substantiate fees charged to customers and paid to its affiliate, C2C Appraisal Services.

The alleged violations occurred between Oct. 1, 2010, and March 31, 2012, and were uncovered as the result of an investigation, MMC authorities said in a consent order. As a result, Prospect was ordered to pay restitution to every borrower in all participating states that was assessed a C2C Settlement Service Fee in the amount of $40 with interest of 10% per annum from the date the fee was charged.

That was in addition to the $7.4 million fine to be paid to state mortgage regulators.

Headquartered in Sherman Oaks, Calif., Prospect Mortgage is one of the largest independent residential retail mortgage lenders in the U.S. The company offers a full range of loans, including Federal Housing Administration and Veterans Affairs loans, as well as conventional, jumbo and super jumbo, renovation, and other loans.

For more about the acquisition, click here.

 

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