Arbor National Mortgage Inc., Westbury, N.Y., is the leading contender to buy United Mortgage Corp., Minneapolis, according to sources familiar with the proceedings.
No definitive agreement between Arbor and United has been reached, sources said, and negotiations between the two parties continue.
United Mortgage has been on the block since at least August, and has attracted interest from a number of mortgage banks.
Despite tire kicking from a number of potential purchasers, Arbor National "has the inside track to buy United," according to a source following the deal, and will likely emerge as the winning bidder.
Would Crack Top 50
Should the purchase go through, Arbor will vault into the ranks of the top 50 mortgage servicers in the country.
As of June 30, Arbor serviced $3.4 billion of mortgages while United Mortgage had $3.8 billion in its portfolio.
In buying, United, Arbor would also immediately diversity its geographic mix by expanding into the upper Midwest,
Servicing Center a Draw
United's originations are concentrated in the Midwest and Florida, and accounted for $1.7 billion in volume last year.
Arbor's originations were concentrated in the northeast corridor between Virginia and Massachusetts.
One aspect of the prospective purchase which may be especially attractive to Arbor National is the opportunity to obtain United's servicing, center in Bloomington, Minn., according to Kevin Timmons, an analyst who covers Arbor for First Albany Corp.
Arbor currently services its mortgages at a center near its Westbury headquarters.
|An Expensive Area'
"There is no doubt that Long Island is an expensive area in which to run a servicing center," Mr. Timmons said.
"This may represent an opportunity to get a lower cost platform.'.
Arbor officials declined to comment and United Mortgage officials did not return phone calls.
United Mortgage is owned by Miller & Schroeder Inc., and Marshall Financial Inc., Minneapolis-based investment concerns. The owners purchased United Mortgage from the Resolution Trust Corp. in late 1991 for $100 million.
United Mortgage is the parent of IDL Mortgage, Fort Myers, Fl, and Valley Mortgage, Fargo, N.D. It also owns Stewart Title Company of Minnesota, Minneapolis.
Services $3.4 billion in mortgages
Operates in New York, New Jersey, Connecticut, Pennsylvania, Maryland, Virginia, Massachusetts
Services $3.7 billion in mortgages
Operates in Midwest and Florida, and in additional states through correspondents