Provident Funding Associates, the second largest privately held nonbank mortgage lender in the U.S., this week filed a registration statement with the Securities and Exchange Commission to create a publicly traded REIT by raising $300 million in capital.

The new company, Provident Mortgage Capital Associates, will purchase residential mortgage loans, MBS and other mortgage related assets primarily through Provident Funding.

According to figures compiled by National Mortgage News and the Quarterly Data Report, Provident is the nation's second largest wholesaler, and ranks 11th overall among funders. The company is based in Burlingame, Calif. (The nation's largest private lender is Quicken Loans of Livonia, Mich., according to the QDR.)

In 2011 Provident Funding originated $27 billion of loans – 93% of it through loan brokers.
The wholesale total includes nearly $4 billion in loans from Colorado Federal Saving Bank, which is 89% owned by Craig Pica, who also happens to be chief executive and president of Provident Funding. Pica will serve as chairman, CEO and president of the new REIT.

Initially, the REIT will concentrate on agency MBS with a lesser focus on jumbo loans. "Given our long-term view that the market for non-conforming residential mortgage loans including, in particular, jumbo loans, will grow, we expect our portfolio to become increasingly focused on this asset class over time," the filing said.

Provident Funding had an average cost to originate of 12 basis points last year and an annual cost to service of $42 per loan, the filing said. The filing said Provident Funding would be the subservicer for any loans the REIT acquires.

Besides the IPO, there will be a concurrent private placement sale of common stock to Pica and other officers of Provident at the IPO price. This private placement will have a minimum aggregate investment of 7.5% of the gross proceeds of the IPO.

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