Beleaguered home equity lender Preferred Credit Corp. has reportedly found a buyer.
The high-loan-to-value specialist is being acquired by an independent Iranian investor, sources close to the company say.
The investor, who is "very private," an analyst said, also owns several technology and processing companies.
The purchase price was rumored to be as low as $8 million, with an additional $14 million to be paid if Preferred's loan portfolios prove healthy.
The move could signal a turnaround for Preferred, which had to back out of an initial public offering following a fraud investigation.
The Irvine, Calif.-based company was scheduled to raise $100 million in the offering, but the transaction was cancelled when an investigation by the California Department of Corporations revealed that Preferred had falsified loan files and failed to remit funds to borrowers in a timely manner. An Orange County Superior Court found that the company had backdated loans and forged UPS slips to charge interest on loans that borrowers had not yet received.
The California Department of Corporations moved to revoke Preferred's mortgage license, and the company paid more than $1 million in civil fines in July.
Preferred, whose license has not been revoked, is expected to agree to a settlement with the department, a spokeswoman for the state said.
Todd Rodriguez, chief executive of Preferred, will be continue to run it, investment bankers say. Mr. Rodriguez, 29, started Preferred in 1989.
Loan originations at the company increased from $16.5 million in 1994 to $596.9 million last year. Preferred uses brokers nationwide for its high- LTV loans.
Several lenders at a recent conference in Chicago said CS First Boston, which retains a minority ownership through warrants, helped set up the acquisition, in part because Preferred was having a hard time raising capital. A CS First Boston spokesman said the bank did not fund the investor but expects to be doing business with Preferred in the future.
Preferred Credit did not return several calls about the rumored deal.