Credit Suisse First Boston Corp. has agreed to buy SPS Holding Corp., the parent of the subprime servicer Select Portfolio Servicing Inc., from the Walnut Creek, Calif., mortgage insurer PMI Group Inc. and other investors.
The $144.4 million deal, announced Friday, is expected to close next quarter, PMI and CSFB confirmed in separate releases.
CSFB said it would make future contingent payments of up to $39.9 million to PMI, the majority owner of SPS, and two other shareholders - FSA Portfolio Management Inc. and Greenrange Partners LLC - for loans Select is servicing for third parties.
Select would continue to provide servicing for third parties, but CSFB plans to integrate it into its mortgage bond business.
Andrew Kimura, a co-head of structured products trading at CSFB, said the deal would help the broker-dealer build its "residential mortgage businesses and cut costs by capturing servicing fees now paid to outside vendors."
Select, which services 270,000 loans, is based in Salt Lake City and has operations in Jacksonville, Fla.
Formerly known as Fairbanks Captial Corp., it settled a federal investigation of its servicing practices for $40 million in 2003.
As of June, CSFB had underwritten $36.5 billion of mortgage securities.
