PrimeSource Mortgage Inc. said the Federal Housing Administration's changes to originator-approval practices were the impetus behind its deal to buy United Community Mortgage Corp.
PrimeSource, a Roswell, N.M., net branching subsidiary of PSM Holdings Inc., was a correspondent originator of FHA loans until the agency ended the mini-Eagle approval designation.
Instead of approving correspondent originators itself, the FHA now lets the lender approve brokers, similar to what happens in the conforming market.
A PSM spokesman said it made the deal for United Community, a mortgage banker with offices in New York and New Jersey, because of United Community's full Eagle status.
Under a letter of intent signed by the parties, United Community would be merged into PrimeSource Mortgage, which would take over United Community's full Eagle designation. A Feb. 18 Securities and Exchange Commission filing said the companies were negotiating the amount of PSM's publicly traded common stock to be issued to United's sole shareholder.
