Cendant Quietly Shops Loan Unit

Cendant Mortgage Corp., which is quietly being shopped around by its parent company, posted record revenue of $1 billion in 2003, a handsome increase of 114%.

But in the fourth quarter, Cendant Mortgage, like many residential finance firms, saw its revenue drop by 13% to $215 million.

It is projecting revenue of $775 million to $825 million for 2004. The company does not break out the net earnings of the mortgage unit separately.

One positive for the mortgage company is that its servicing amortization/impairment charge fell to $158 million in the fourth quarter, compared to $263 million in the year ago quarter.

Cendant, which is based here, is a subsidiary of Cendant Corp., New York, a consumer/business conglomerate that includes several large realty firms as well as travel and hospitality services.

Cendant Mortgage has about $130 billion in servicing rights on its books and ranks 10th nationwide, according to the Quarterly Data Report.

In December, National Mortgage News, an affiliate of this publication, reported that the mortgage unit was being shopped around to selected bidders by its parent company.

Sources said one firm that was approached was Countrywide Home Loans of Calabasas, Calif. (Both Cendant and Countrywide have declined to discuss the issue.)

Goldman Sachs & Co. is Cendant's investment banker.

In years past, Cendant Mortgage has been rumored to be for sale, but the company has always denied it.

Cendant is best known in the industry as a private label funder and a leader in relocation mortgages. It is one of two non-depositories ranked among the top 10. The other is GMAC Mortgage of Horsham, Pa.

According to a late 2002 document, its private label clients include ERA Mortgage, Independence Community Bank, Mellon Bank, Merrill Lynch, USAA Federal Savings Bank and several others. With interest rates rising somewhat and production expected to slow significantly this year, its origination business may not fetch much, but the value of its receivables could rise significantly as prepayments wane.

Copyright 2004 Thomson Media Inc. All Rights Reserved. http://www.thomsonmedia.com http://www.mortgageservicingnews.com

Next in News ►