Freedom Purchase
Irwin Financial Corp. of Columbus, Ind., said that it sold its conforming loan production business to Freedom Mortgage Corp. of Mt. Laurel, N.J., for $275 million in cash.
The deal closed Tuesday, a spokeswoman for Irwin said Wednesday. When the deal was announced last month, Irwin did not say how much Freedom would pay for the platform.
Freedom has said the platform should about quadruple its loan volume, which had been on pace to reach about $3 billion this year.
Out at PHH
The former chief financial officer of PHH Corp., who had been demoted shortly before it revealed accounting problems, has left the Mount Laurel, N.J., mortgage outsourcing and fleet management company.
In late February Neil J. Cashen resigned as the CFO and an executive vice president and was demoted to senior vice president. According to a securities filing Tuesday, he resigned from that position last week after 27 years with PHH.
The accounting problems, many of which relate to PHH's February 2005 spinoff from Cendant Corp., came to light March 1, when the demotion was announced.
The issues will probably require PHH to restate several years of earnings. It has not reported results for this year or the fourth quarter of last year. The reporting delay has caused the company to scramble to obtain waivers to technical default covenants from its lenders.
Under his separation agreement, Mr. Cashen will receive a $1.8 million payment. He will retain outstanding stock options and restricted stock, which will continue to vest as if he remained at PHH through Oct. 11, 2009. He also will receive any bonus that may be payable for last year.
In the filing, PHH said it expects to file its 2005 annual report by Nov. 1. It also said that it expects to miss the deadline for filing its third-quarter report, but that it could not further estimate when this year's reports will be done.
To fix its past accounting and current controls, PHH said, it expects to "incur incremental fees and expenses … of approximately $30 million to $35 million." It also said that "fees and expenses will remain relatively higher than historical fees and expenses" for the preparation of results "for the next several quarters."
PHH said it needs to give the audited reports of its subsidiaries, and related documents, to certain regulators, investors, and other parties to satisfy state licensing and contractual requirements. Certain waivers with state licenses will expire Friday.
The company said it expects to complete the financial statements of its PHH Mortgage Corp. and the unit's subsidiaries this week to meet the regulatory and contractual requirements.
In at Ditech
Residential Capital Corp.'s ditech.com said Wednesday that it has hired Richard D. Powers as a senior vice president and its general manager.
He joined the online lender from Metrociti Mortgage Corp., where he was the president of its western division.
Residential Capital is the holding company for the residential mortgage businesses of GMAC LLC, the financial services arm of General Motors Corp. (The automaker is in the process of selling a majority stake in GMAC to an investor group.)
Before joining Metrociti, Mr. Powers was the president of KB Home's mortgage unit. Countrywide Financial Corp. bought the unit last year and formed a joint venture with the builder.
He was also the president and chief executive of Charter One Mortgage Corp. for seven years.
Down in Calif.
August home sales in California fell 30.1% from a year earlier, the biggest decline in 24 years, while the median price of an existing single-family home rose 1.6%, to $576,360, the California Association of Realtors said.
"This is another indication that we're in the initial stages of a long-anticipated adjustment in the market," Vince Malta, the trade group's president, said Monday in a press release.
The trade group said it took 52 days to sell a single-family home last month, compared with 29 a year earlier. The time it would take to deplete the supply of homes on the market was 6.8 months, compared with 2.6 a year earlier.
"Homes are taking longer to sell than a year ago, with just 29% of homes on the market for 30 days or less, compared with 51% a year ago," Leslie Appleton-Young, the realtor group's chief economist, said in the release.
Quotables…
"We view the … guidance as relatively benign and unlikely to materially impact the business models of option ARM lenders. … We would not be surprised if the stocks trade higher after the release of the guidance, as it lifts another layer of uncertainty."
– Friedman, Billings, Ramsey & Co. Inc. analysts in a report released Wednesday predicting bank regulators will release final "nontraditional mortgage" guidance in "the next few days."
"There is no doubt innovations in mortgage lending have produced efficiencies and competition that are often good for lenders and borrowers. However, while they have made borrowing easier and more user-friendly, they have also made it more abuser-friendly."
– John M. Reich, the director of the Office of Thrift Supervision, in a Sept. 22 speech to the Ohio Bankers League and the Illinois League of Financial Institutions.
