Norwest Mortgage Inc., in a move that will make it the nation's largest mortgage company, is close to a final agreement to acquire almost all of Prudential Home Mortgage Co.
Negotiations with First Union Mortgage Corp. fell apart last week, sources close to the deal said. First Union had been expected to acquire the part of Pru Home Mortgage that originates and securitizes jumbo loans.
Norwest will buy some $660 million of assets from Prudential, including servicing rights on $40 billion of loans, two servicing sites, and the jumbo conduit. While the price is still being negotiated, it will be less than the $1 billion industry observers had initially anticipated.
The deal will make Norwest the largest mortgage servicer, with a portfolio of about $140 billion.
A deal with First Union would have turned over the jumbo servicing rights to renowned hedge fund manager George Soros. After completing due diligence, Mr. Soros brought his offer down by $50 million. Prudential turned to Norwest after Mr. Soros would only bring his offer back up by $25 million.
Norwest will subservice $37 billion of jumbo loans, while Prudential will retain the servicing rights. The servicing rights Norwest will buy are for Fannie Mae, Freddie Mac, and government loans.
Sources said negotiations had been farther along with Norwest than with First Union, and when problems divided Prudential and First Union, Pru and its investment bankers decided to strike a deal with one buyer.