The founder of Arcs Mortgage Inc., Howard Levine, has kept a hand in the mortgage pot with the recent purchase of the now-defunct lender's multifamily division.
Mr. Levine and a group of California real estate investors have purchased the unit from Bank of New York Co., which had put Arcs Mortgage up for sale in July 1994. The deal also includes the purchase of a $1.3 billion servicing portfolio.
The deal ends the saga of the mortgage unit that could not be sold.
When Bank of New York failed to find a buyer for Arcs, it decided to shut down the Calabasas, Calif.-based lending unit's operations earlier this year.
Since February, the bank has ended the unit's retail lending operations, sold off some of its offices, laid off most of its 500 employees and sold its $9 billion servicing portfolio. Bank of New York has said it would originate home loans in the New York area through its BNY Mortgage Co. subsidiary.
When the bank considered simply shutting Arcs' doors, some mortgage bankers said it was just as well because the unit would be worth more dead than alive.
At the time, potential buyers were scared off by a brutally competitive market as mortgage banks and thrifts fought for bigger shares of a shrinking market.
Bank of New York had tried to exit mortgage banking for several years prior to the decision to simply close shop. In 1992 the bank had filed a registration statement to sell Arcs stock to the public, but pulled back when the market soured.
The residential lending unit originated $1.1 billion of loans in the first half of 1994, and was widely believed to have been a well-run traditional mortgage bank.
The final piece of Arcs residential lending operations, $7.6 billion in servicing, was sold to Chase Manhattan Mortgage Corp. in May.
The purchase of the multifamily lending unit, which will be called Arcs Commercial Mortgage Co., was completed Aug. 1. Terms were not disclosed.
The commercial lending operation will have three production offices - in New Jersey, Chicago, and Calabasas - and is considering others. Most of the staff is from the former Arcs Mortgage unit.
Mr. Levine is not the first creator of a mortgage bank who was not ready to say goodbye to the industry. Ivan Kaufman, who was chairman and chief executive of Arbor National Holdings Inc., Uniondale, N.Y., when it was sold to BankAmerica Corp., bought Arbor's commercial lending unit in December 1994.
