The Prudential Insurance Co. of America announced Wednesday its intention to sell Residential Services Corp. of America, its home lending subsidiary.
Residential Services operates a mortgage bank that has $75 billion in servicing rights and was the No. 3 lender last year. The unit could fetch well in excess of $1 billion, making it the biggest sale ever for the mortgage business.
Prudential said the decision came after a strategic review by its new chairman, Arthur F. Ryan. "Residential Services is a very good business, but we believe the Prudential needs to better focus its resources at this time," Mr. Ryan said.
The announcement confirms a report in the American Banker on Tuesday.
Prudential recorded a loss of $907 million last year and saw its capital base erode by $1.2 billion, to $9.5 billion. Home lending was hit hard last year, recording a loss in the tens of millions.
Residential Services has three main units: Prudential Home Mortgage, Lender's Service Inc., and Residential Information Services.
Lender's Service provides appraisal services. Residential Information Service, recently purchased from Lomas Financial, provides technological support to mortgage servicers.
The phone lines were alive Wednesday as mortgage executives speculated on an eventual buyer. Because of the sheer size of the assets, only the largest banks or corporations could hope to buy Residential Services in its entirety.
Chemical Bank, Citicorp, and Bank of America were mentioned as institutions with the wherewithal if not necessarily the will to pull of such a deal.
Corporate behemoths such as GE Capital Corp. and General Motors Acceptance Corp. were also put forth as potential buyers.
The size of the deal may call for somewhat unusual marketing techniques, experts say. One investment banker suggested that in order to attract the widest group of bidders, it might be necessary to break the company and its servicing portfolio into more easily digestible chunks.
That idea appealed to one top executive at a major bank. "I hope they break the servicing up so I can buy a piece. I couldn't buy the whole thing."
Residential Services is based in Clayton, Mo.