A mortgage company puts itself up for sale. But it doesn't like the offers it receives. Now what?
If the company is Source One Mortgage Corp., the solution for chief executive James A. Conrad and his crew is to sell one piece of the company at an attractive price to give the remaining pieces some new life.
After receiving a booster shot from its sale of $10 billion of servicing, the Farmington Hills, Mich.-based lender is looking like a long- term player in the mortgage industry.
Source One, a unit of Fund American Holdings Inc., was put up for sale in August 1994. After failing to receiving an attractive offer, it took itself off the block last December.
Even though the entire company didn't receive an offer Fund American considered lucrative, it was able to sell $10 billion in servicing to NationsBank Corp. at the beginning of this year.
"They paid us more than we thought it was worth," said Robert Densmore, executive vice president at the mortgage unit.
Source One now stands at a respectable No. 19 in American Banker's ranking of the top servicers. For many years, it was one of the top five servicers. As recently as 1992, it ranked No. 4.
The servicer's decline in the rankings was attributed to runoff during the refinance boom of 1992 and 1993, during which the company was unable to originate loan volume to replenish its portfolio.
"We will always be one of the top servicers, but we don't believe we need size to do that," Mr. Densmore said. He said a profitable operation, along with good partners, allows Source One to be profitable at $30 billion, rather than $100 billion, as some servicers think is necessary.