After Talks Falter, Will IPO Be Next Strategy for Cendant?
Countrywide Financial Corp., Calabasas, Calif., has taken a pass on purchasing Cendant Mortgage Corp., the nation's tenth largest servicer of residential loans, Mortgage Servicing News has learned.
Moreover, a source familiar with the deal said one option for Cendant Corp., the parent of CMC, is to spin off the unit through an initial public offering.
Both Cendant and Countrywide declined to comment as MSN went to press late last week.
Industry sources say price was not necessarily a key factor in talks breaking down over the weekend of March 20th.
One observer said Countrywide and Cendant were far apart on the issue of sourcing of loans from Cendant's realty units to the mortgage division and what value that might have to the deal. (Cendant owns Century 21 and other large real estate brokerage firms. The realty firms are not for sale.)
Cendant is best known in the industry as an affinity lender and private-label funder.
Countrywide was hoping to buy most or all of Cendant Mortgage, taking control of its production operation, $138 billion in servicing rights, and its 7,000 employees.
"I think Cendant is a good operation," said a source. "But Silverman is sick of the volatility of the business, and the impairment charges that go with the servicing." Silverman is a reference to Henry Silverman, chairman of Cendant, which is based in New York.
Goldman Sachs & Co. is acting as Cendant's investment banker.
In December NMN first broke the news that CMC was for sale.
The company is one of two non-depositories ranked among the top ten. The other is GMAC Mortgage.
According to a late 2002 document, CMC's private label clients include ERA Mortgage, Independence Community Bank, Mellon Bank, Merrill Lynch, USAA Federal Savings Bank, and several others.
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