Mortgage Servicers Build Portfolios

The Biggest Handled 20% of All Loans in Second Half

Tightening their grip on the mortgage servicing industry, the top 25 players increased their portfolios by nearly 10% in the second half of last year, an American Banker survey has found.

At yearend, the group was servicing $533.2 billion of mortgages, or 20% of all home loans. The share was up from 19% at midyear.

Funneling Payments

Servicing, the backbone of mortgage banking, entails funneling monthly payments from homeowners to holders of mortgage-backed securities. Servicers also tend to property tax and insurance payments and, when necessary, initiate foreclosure proceedings.

Some of the big gainers in the second half of 1990 are still pushing hard. Sears Mortgage Corp., which zoomed to No. 16 from No. 38 with a big acquisition from Southeast Banking Corp., is looking for more portfolios this year and also has boosted its retail originations.

Prudential Home Mortgage, which jumped to No. 17 from No. 22, last month agreed to acquire a large originations unit and some servicing facilities from Standard Federal Savings Bank, Gaithersburg, Md.

And BarclaysAmerican, which shot up to No. 11 from No. 23, is still seeing its portfolio increase by nearly $1 billion a month, said executive vice president Timothy B. Schuck. The key is a deal whereby the company buys the servicing rights on many of the loans originated by Norwest Corp.

KeyCorp Scores with Goldome

Meanwhile, a new name is breaking into the top ranks of servicing: KeyCorp. The Buffalo, N.Y.-based banking company last week was awarded No. 18-ranked Goldome Realty Credit Corp. as part of a government-assisted acquisition of parent Goldome.

KeyCorp, through a mortgage unit in Milwaukie, Ore., was already servicing nearly $4 billion of loans, said Ralph Carestio, an executive vice president. With the Goldome portfolio, KeyCorp's total has risen to about $18 billion. Had the deal been completed by yearend, KeyCorp would have ranked No. 10.

"We have made a very active decision at KeyCorp that mortgage servicing and the mortgage banking business is a line of business that we intend to expand in," Mr. Carestio said.

KeyCorp probably will consolidate its servicing operations in Buffalo at some point, he said. Another goal, he said, is to boost retail originations. Both Goldome and KeyCorp have been relying heavily on purchasing mortgages from other lenders.

The head of the Oregon unit, Jeffrey A. Evershed, will also oversee Buffalo operations. [Tabular Data Omitted]

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