David Frank, the former chief executive of Chemical Residential Mortgage Corp., is close to a deal to buy a small St. Louis-based mortgage firm.
Mr. Frank has signed a letter of intent to buy Patriot Mortgage Co., according to industry sources. Details of the deal were not available, and Mr. Frank could not be reached for comment.
Robert Keating, chairman of Patriot, said no deal to sell the company has been announced. He had no further comment, he said, because the company is raising capital.
Patriot originates about $300 million of residential mortgages a year. Most of its originations are loans of the highest credit quality.
Wendover Funding Inc. subservices most of Patriot's portfolio of servicing rights, Mr. Keating said.
Mr. Keating is a former director of the mortgage banking group at Salomon Brothers Inc.
The anticipated acquisition comes as the mortgage industry is consolidating and commercial banks are eagerly entering the business by acquiring small companies. Some large players - such as Prudential Home Mortgage, which has been on the auction block since last March - have chosen to exit the business.
Mr. Frank was chief executive of Chemical Banking Corp.'s mortgage unit before resigning last June. He had joined Chemical when it acquired Margaretten Financial Corp., where he was president.
At the time of his resignation, Mr. Frank, 47, said he was unable to pursue "other things" while at Chemical but found himself wanting to. Industry speculation at the time was about an inferred culture clash between the entrepreneurial mortgage banker and the commercial bank's bureaucracy.
One mortgage banking executive said he is not surprised Mr. Frank is planning to buy a small mortgage company. "It's right up his alley," the executive said.