Washington Mutual Inc.’s deal to buy PNC Financial Services Group Inc.’s mortgage unit would diversify its product line, geographic reach, and sources of income.

Size is also a key driver for the deal, rumors of which had circulated in the market last week. The Seattle thrift company is to pay $605 million in cash and assume considerable debt in the acquisition, which would create the industry’s second-largest originator and fourth-largest servicer, according to National Mortgage News, a sister publication of American Banker.

Between them, Wamu and PNC Mortgage, of Vernon Hills, Ill., originated $61 billion of loans last year and serviced $255 billion in the first half of this year.

The deal was announced Monday and is expected to close in the first quarter. PNC expects to record an after-tax gain of $250 million as a result of the sale.

“Scale will determine the leading players in the mortgage industry,” said Kerry Killinger, chairman and chief executive of Washington Mutual. The deal for the PNC unit, he said, “adds scale in a scale-required business.”

Craig S. Davis, president of the home loan and insurance services group at Wamu, said PNC Mortgage would bring his company 131 retail mortgage offices, most of them in the Midwest and Northeast, areas where Wamu — whose stronghold is on the West Coast — has wanted to expand.

Marangal I. Domingo, senior vice president and treasurer of Wamu, said Pittsburgh-based PNC also agreed to refer to Wamu all customers who come to its bank branches and inquire about mortgages. Those referrals would represent about $3 billion a year of volume, he said.

Washington Mutual plans to be both a big mortgage bank, which makes fixed-rate loans and sells them in the secondary market, and a portfolio lender, which makes adjustable-rate loans to hold on its books. The acquisition would play into that strategy by rounding out Wamu’s mortgage banking capabilities.

Mr. Davis said that while Washington Mutual currently makes the most of its loans through brokers, PNC Mortgage re-entered that business this year after a five-year hiatus. The PNC unit, on the other hand, is big in correspondent lending — buying loans that have already been funded and closed. Wamu entered correspondent lending this year with its acquisition of Alta Mortgage.

There may be some overlap. Between the deal for the PNC unit and another to buy Bank United of Houston, Wamu would have to figure out what to do with five servicing centers. Wamu has two — one in Seattle and one in Chatsworth, Calif. — Bank United has one in Houston, and PNC Mortgage has two — one in Vernon Hills and one in Louisville, Ky.

The good news for Wamu, Mr. Davis said, is that all five use Alltel’s servicing systems, so integration should not pose a problem. But he said his company has not decided whether it wants to keep all five, and will make those decisions over the next few weeks. “We have been talking for some time about having servicing capabilities in another time zone.”

Wamu also has not yet decided what is to become of PNC Mortgage’s senior management, Mr. Davis said. But he said the Vernon Hills operation would not be a separate subsidiary of Wamu, as it was under PNC, but would be meshed into the thrift’s Washington Mutual Home Loans division.

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