Chase Mortgage Co., a subsidiary of The Chase Manhattan Corp., signed a purchase agreement last week to acquire the residential mortgage business of Mellon Bank, N.A., positioning Chase to become the nation's largest mortgage servicer.
The acquisition includes a $55 billion servicing portfolio with 630,000 customers, warehouse loans and other assets. Mellon also has annual origination capability of more than $4 billion, company officials stated.
"The bottom line is, for those securities that we hold that are currently serviced by Mellon mortgage, Chase would now become our servicer," said Stephen Dishart, a spokesman for Mellon. "Similarly, for those mortgage-backed securities that are serviced by Mellon, Chase will then become the servicer for those as well."
The proposed acquisition would result in Chase being the largest U.S. mortgage servicer, with more than 3.1 million customers and a combined portfolio of $292 billion; currently Chase ranks third. In the first half of 1999, Chase was the nation's largest mortgage originator for the first time.
Terms of the transaction were not disclosed. The acquisition is subject to regulatory approvals and is expected to close by the end of the third quarter.
"This acquisition expands our customer base significantly, by 25%," said Thomas Jacob, Chase Manhattan Mortgage Corporation Chairman and CEO. "We're excited about leveraging our investment in existing infrastructure over a larger customer base, which will improve our servicing and origination margins."
"We're very pleased to enter this agreement with an organization dedicated to continuing to provide our customers with the high level of service they expect," said Martin G. McGuinn, chairman and chief executive officer of the Mellon Bank Corp. "As a leader in residential mortgage origination and servicing, Chase has expertise and resources to make significant investments in technology. We will be working together to ensure a smooth and seamless transition for our customers."
Chase Manhattan Mortgage Corp., with headquarters in Edison, N.J., is currently the nation's largest residential mortgage lender and third largest servicer.
Chase's home finance lending businesses include home equity, subprime and manufactured housing loans. Chase's National Consumer Services franchise serves more than 30 million customers coast to coast and is a provider of financial solutions to individuals and small businesses.
A broad-based financial services company with a bank at its core, Pittsburgh-based Mellon Bank Corp. ranks among the nation's largest financial services companies in market capitalization.
According to market sources, Chase has been expanding its mortgage business for some time now. In February, it agreed to buy First Town Mortgage Corp. and HomeSouth Mortgage Corp. for an undisclosed sum. Further, late last year, Chase acquired Mellon's 26 loan branches in the western U.S., which produce $750 million in mortgages a year.