WL Ross Buying Option One's Servicing

WL Ross, the buyout firm headed by Wilbur Ross, is adding to its mortgage holdings by purchasing Option One's mortgage servicing business for $1.1 billion. The firm, which previously bought the servicing rights of bankrupt American Home Mortgage, will take over all of Option One's servicing rights on $53 billion of subprime home mortgages. Combined with the American Home portfolio, the WL Ross unit will service $95 billion of subprime mortgages, making it the second largest subprime mortgage servicer after Countrywide Financial. Option One's servicing facilities in Irvine, Calif.; Jacksonville, Fla.; Las Vegas; and Pune, India, are included in the sale. "Notwithstanding the problems of the subprime lending industry, we regard mortgage servicing as an attractive business and believe that there are considerable economies of scale attached to it. We shall therefore continue to seek acquisitions of prime, alt-A and subprime servicing," Mr. Ross said. The deal is subject to regulatory approvals and other closing conditions, including the completion of a $1.2 billion financing transaction that has been committed from Option One's existing lenders. Closing is expected to occur before the end of May, WL Ross said.