As mortgage industry veterans go, John Robbins is one of the most authentic on the scene.
As founder and chief executive of American Residential Mortgage Corp., La Jolla, Calif., Mr. Robbins has taken his company from anonymity to national prominence not once, not twice, but three times over the past decade.
American Residential's agreement two weeks ago to buy Fort Worth-based Foster Mortgage Co. is his latest move to secure a bright future for the company.
He started the company in 1983 as a unit of the old Imperial Savings. It was sold in 1988 to First Nationwide Bank, a unit of Ford Motor Co. When Ford threatened two years later to shut down or sell the company, Mr. Robbins and his management team pooled their money and organized a buyout.
Last year, Mr. Robbins led the company in going public, a move that has proved spectacularly successful and has firmly reestablished American Residential in the upper ranks of the mortgage industry.
"We certainly had times when the long-term outlook was a little bleak," Mr. Robbins said about the company's past.
While American Residential's purchase of Foster's $3.5 billion in servicing and its large servicing center in Fort Worth is puny compared with other recent servicing deals in the industry, it fits well with Mr. Robbins' plans.
By tripling the company's servicing capacity to $90 billion and bringing its current portfolio to almost $14.5 billion, the deal gives American Residential the space it needs to be a major player in the rapidly consolidating mortgage banking industry.
Mr. Robbins said buying Foster was just the first step along a five-year road to a $50 billion servicing portfolio and a position at the top of the mortgage servicing industry, two things he feels are essential for the company's survival.
And he said he sees more deals in American Residential's future. "To get to $50 billion, it's going to take a combination of both acquisition and originations."
Foster Is a Strategic Fit
American Residential is one of the country's largest originators, and buying Foster puts it in range of the top ranks of the country's servicers, too. "We targeted Foster for a lot of reasons. They have good people, they have a platform up and operating that has the capability to go to 500,000 loans without requiring any additional space, and it's in a tax advantaged state compared to California."
The 500,000-loan capacity translates into about $60 billion in servicing. Coupled with American Residential's $30 billion capacity in its San Diego facility, the sky's the limit for the immediate future.
Servicing is important to American Residential, Mr. Robbins said, because when originations ease after a rise in interest rates, it will provide a long-term source of funds.
"They are an annuity stream that gets more valuable as interest rates rise. We want to grow that annuity stream to the largest possible extent that it can be grown."