Harbourton Financial Services LP announced that its subsidiary, Harbourton Mortgage Co., had entered into a letter of intent to sell its wholesale loan production branch operations to Crossland Mortgage Corp., a subsidiary of First Security Corp., for about $4 million in cash.
The sale would be the first step in a planned liquidation of the parent company attributed to an impending change in tax status.
In addition to the $4 million, Harbourton Mortgage will receive an earn- out payment based on the amount of loans generated from the transferred facilities during the 13 months following the closing.
If Crossland maintains the same volume of loan originations as Harbourton Mortgage in 1996, this payment would total about $3.25 million.
The proposed purchase would not include the mortgage loan pipeline being processed by Harbourton Mortgage at the time of the sale. The excluded loans will be processed and closed for Harbourton Mortgage's account by Crossland.
Under existing law, Harbourton would become taxable as a corporation after Dec. 31, 1997.
Harbourton officials said this deadline, the potential sale to Crossland, and an assessment of the mortgage banking industry prompted their decision to sell the company's remaining assets, including its servicing portfolio and Nebraska servicing operation.
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TAMPA-IMC Mortgage Co. has acquired all of the operating assets of American Mortgage Reduction Inc.
The deal calls for an initial payment in cash. A contingent payment must be made in three years in cash or, at IMC's discretion, shares of IMC common stock.
IMC will account for the acquisition as a purchase. American will continue its lending activities as an independent operating unit.
American, a nonconforming mortgage lender based in Baltimore, is headed by Harry Korotki and Marc Heyman. The company, which employs about 100 people, originates primarily nonconforming residential mortgages through a network of six retail offices in Maryland, Pennsylvania, and Virginia using telemarketing and direct mail. Its current origination volume is about $10 million per month.
Harry Korotki, who will remain as president, said, "We recognized the benefits of this industry's consolidation and selected IMC as a merger partner to be a part of one of the fastest-growing and most respected nonconforming lenders in the United States. AMR will benefit greatly from the additional resources available with IMC."
George Nicholas, chairman of IMC, said, "The acquisition of AMR helps us consolidate our strengths and further expand our base of retail loan originations."
IMC, based in Tampa, is a specialty finance company that originates and purchases loans through a network of correspondent lenders, mortgage brokers, and retail offices in the United States and through a joint venture in the United Kingdom.
