CUNA Mutual Group, which owns 50% of CUNA Mortgage Corp.'s $4 billion loan servicing portfolio, intends to buy the other half.
The price was not disclosed.
The board of the Madison, Wis., insurer voted Aug. 3 to assume by Dec. 31 the entire servicing portfolio, which represents 65,000 accounts.
CUNA Mutual, an independent member-owned organization, shares ownership of the portfolio with CUNA Service Group, a subsidiary of the Credit Union National Association.
CUNA Service Group viewed the mortgage servicer as a drain on resources, industry sources said. Moreover, the company was said to be having difficulty competing with larger secondary market organizations.
The sale will split CUNA Mortgage in two.
Apart from the servicing group, which is going to CUNA Mutual, CUNA Mortgage also has an ongoing alliance with PHH U.S. Mortgage Corp. Under that arrangement, CUNA Mortgage offers sales and relationship management as well as training to credit unions, while PHH U.S. Mortgage provides operational and technical assistance.
CUNA Mutual and CSG plan to share ownership of a new company that will conduct the joint venture with PHH U.S. Mortgage, said Brad Murphy, chief operating officer of CSG and president of CUNA Mortgage.
CUNA Service Group had sought since last year to break up CUNA Mortgage, Mr. Murphy said.
"I look at it as there being an old and new CUNA Mortgage," Mr. Murphy said. "The servicing portfolio is the old CUNA Mortgage; the new corporation is the new CUNA Mortgage."
The servicing changeover should be transparent, and the same staff will work on the portfolio, Mr. Murphy said.
Originally CUNA Service Group had hoped that PHH U.S. Mortgage would purchase the portfolio, but the bid was below market, sources said. Also, some credit unions were leery of sending the servicing to a noncredit union-related organization.
