Spring Mountain Escrow Inc., one of the two companies jointly purchasing Weyerhaeuser Mortgage Co., seems on the surface an unlikely acquirer of mortgage assets. But the company is headed by a seasoned mortgage executive who once was in line to head the mortgage operations of BankAmerica Corp.
Scott A. McAfee, president and chief executive of Irvine, Calif.-based Spring Mountain, was the head of Security Pacific Corp.'s mortgage unit before Security Pacific merged with BankAmerica in 1992. He was selected to head the combined mortgage operations at BankAmerica but turned the job down.
Mr. McAfee could not be reached for comment. But in an interview with American Banker in 1995, he spoke about how his company was more than just an escrow provider.
He stressed that Spring Mountain, the largest escrow company in California, also owns a small thrift, Pioneer Savings and Loan. Through Pioneer, Spring Mountain holds money in escrow, creating a source of low- cost funds, Mr. McAfee said. These funds are used to generate warehouse lines of credit, which in turn are used to originate a small amount of home loans.
He also spoke about the merger-and-acquisition environment in the mortgage industry and predicted that mortgage lending companies would not be the only ones participating in the consolidation.
"The longer-term trend is going to be an overall consolidation of all the companies involved in the residential real estate transaction, the simultaneous packaging of real estate services," he said.
Now it appears as if Mr. McAfee is fulfilling this prophecy. Woodland Hills, Calif.-based Weyerhaeuser originated about $3 billion in 1996, making it one of the nation's top 50 loan producers.
And in the subprime area - the origination of loans to customers with flimsy credit histories - Weyerhaeuser ranks as one of the 25 largest originators.
Industry observers expect that the new owners of Weyerhaeuser will focus on the subprime sector-so-called B and C loans-since it is more profitable than conventional A loans. Some observers said that the new owners were probably looking to do so in order to take Weyerhaeuser public.
This seems especially likely when you consider that the other partner in the deal is Apollo Investments, the investment firm run by financier Leon Black. Mr. Black, formerly head of mergers and acquisitions at defunct Drexel Burnham Lambert, has made several real estate investments through his group of Apollo funds.