Last year’s changes by the Federal Housing Administration in its originator approval practices are the primary motivator for the latest acquisition by a Roswell, N.M.-based branching company.
PSM Holdings Inc., and its subsidiary PrimeSource Mortgage Inc., was a correspondent originator of those loans until the agency ended the mini-Eagle approval designation. Instead of approving correspondent originators itself, the FHA now lets the end lender approve brokers, similar to what happens in the conforming market.
Now PSM is in the process of purchasing United Community Mortgage Corp., a mortgage banker with offices in New York and New Jersey.
This deal driver, a PSM spokesman said, is the full Eagle status held by UCMC.
Under a letter of intent signed by the parties, UCMC will be merged into PrimeSource Mortgage, and the mortgage company will take over UCMC’s full Eagle designation.
According to a Securities and Exchange Commission filing, the two companies are negotiating the amount of PSM common stock to be issued to UCMC’s sole shareholder, as well as an employment agreement for that sole shareholder.
Jeff Smith, president of PSM, said in a statement, “We are thrilled about this acquisition as it will become the cornerstone of our new mortgage banking network. Having the full Eagle designation will lead to exponential growth in the very near future.”
It is the first time PSM will have a presence in the New York/New Jersey region, the spokesman said.
PSM is licensed in 15 states and has over 30 branch offices. Its common stock is traded on the over-the-counter bulletin board. For its second fiscal quarter of 2011, which ended on Dec. 31, 2010, it reported a net profit of $30,307, according to its most recent 10-Q filing.
