The summer doldrums seem to have descended a few weeks early on merger activity in the mortgage business. Even the usually prolific rumor mills were quiet.
As a result, there were two unsolved mysteries: Who bought ITT Residential Capital Corp.? And who's buying Prudential's mortgage business?
Few suggestions were available. Speculation about a Pru deal has centered on GE Capital Mortgage, AT&T, and a venture capital firm, but no new details have been added in recent weeks. Earlier talk that Microsoft Corp. might be involved has disappeared.
Meanwhile, Pru's $75 billion servicing portfolio appears to be vulnerable to a writedown because of new accounting rules, and the total impact is impossible to measure from the outside. Countrywide Credit Industries, Pasadena, Calif., had to take a writedown of more than $100 million in its first fiscal quarter but avoided a loss through successful hedging. The other effects of the new rules were generally positive for Countrywide.
Bids for the Pru properties are said to be due Monday.
ITT gave a low profile to the sale of its mortgage company, announcing it late Friday along with the sale of other, larger financial services businesses. And no buyer has so far owned up to doing the deal with ITT.
One small surprise was the purchase of two Atlanta-based mortgage originators by out-of-state companies. Atlanta has been one of the healthier housing markets, but smaller lenders are apparently still struggling to get back on their feet.
The two were HomeSouth Mortgage Corp., and HomeBanc Mortgage Corp. HomeSouth was bought by First Town Mortgage Co. of Secaucus, N.J., a regional lender that was making its second deal of the quarter. Earlier, it bought the Houston-based wholesale production offices of Arcs Mortgage, a unit of Bank of New York.
HomeBanc reached an agreement with First Tennessee National Corp., which has been an active acquirer over the last year or so.