Another insurance company is high-tailing its way out of realty mortgage lending.
Metmor Financial Inc., Overland Park, Kan., the residential and commercial mortgage banking subsidiary of Metropolitan Life Insurance Co., is on the selling block.
Metmor stopped originating residential mortgages in 1988 but continued originating commercial mortgages and servicing both types of loan. It serviced $13 billion of mortgages at March 31, about $9 billion of them residential.
Metropolitan Life hired Goldman, Sachs & Co. in April as its investment banking adviser. No price has been mentioned, but recent deals suggest the servicing might bring $150 million to $200 million.
Metmor's move came after the March announcement by Prudential Insurance Company of America that it would sell its mortgage subsidiary, Prudential Home Mortgage Co.
The Prudential unit is the biggest property now on the block. Its $75.6 billion of servicing and $24 billion of originations could easily fetch $1 billion if sold to a single bidder.
Metmor's parent cited its desire to focus on core businesses as its reason for leaving the mortgage business.
When making a similar move a few years ago, another insurance company cited a lack of cross-selling opportunities as the reason for selling its mortgage unit.
"We would have been willing to absorb the downside of the cycle if the cross-selling had been there," said Floyd L. Smith, executive vice president at MONY Financial Services, the mortgage unit of Mutual Life Insurance Company of New York. The unit was sold by its parent in 1989.
At that time, some mortgage industry veterans maintained that insurers and others that entered the field when it was booming were not prepared to weather the inevitable sharp decline during a down cycle for the market.
