Source One Mortgage Services is receiving a shot in the arm from its parent company.
Fund American Enterprises Holdings Inc., Source One's parent, is contributing $134 million in common equity to Source One's balance sheet.
In addition, Source One will be reclassified as a subsidiary of White Mountains Holdings Inc., the Fund American subsidiary that operates several insurance companies.
Source One has also named James H. Ozanne chairman, succeeding Terry L. Baxter. Mr. Baxter has been appointed president of White Mountains.
Mr. Baxter said the infusion of capital to Source One's balance sheet was designed to improve the credit ratings assigned by the Wall Street rating agencies.
Mr. Ozanne, who will work out of Source One's Farmington Hills, Mich., headquarters, said the capital would enable him to reduce the company's costs, especially for borrowing.
"This has been one of areas where we have been disadvantaged," he said.
Mr. Ozanne was elected to Source One's board last year to help formulate a new strategy for the company.
As part of this new strategy, the company completed a sale of about $17 billion of its servicing to Chase Manhattan Mortgage Corp. late last month. Source One will subservice the loans for Chase for at least a year.
Some observers questioned Fund American's commitment to the mortgage banking business following the sale, announced last December, but these latest changes could erase some of the doubts.
"Coming off of the sale, a lot of questions were raised about Fund American's commitment to Source One. This underscores that they will be a factor in the servicing market," said Robert N. Husted Jr., principal of MIAC Risk Management Services, New York.
And with the mortgage industry in a period of rapid consolidation, Source One will also be looking to find and exploit "defensible niches" in areas such as subservicing, Mr. Ozanne said.
Mr. Ozanne, who has been a senior executive at GE Capital and NationsBank, has not worked in mortgage banking. Source One's president and chief executive officer, James Conrad, will continue to run the company's day-to-day operations.
