Cash transaction expected to close in 3rd quarter
By MortgageDaily.com staff
5/27/2005

New Century Financial Corp. will dramatically expand its residential lending operations through a planned acquisition later this year that will put it in the prime and Alt-A business.

The Irvine, Calif.-based subprime lender announced today that subsidiary Home123 Corp. will acquire some assets of RBC Mortgage Co. in a cash transaction anticipated to close in the third quarter.

Houston-headquartered RBC reported $17.2 billion in production last year. The company says it employs 3,000 people at more than 200 branches -- of which New Century will pick up 135 -- in 30 states and is licensed in all 50 states.

"The U.S. remains strategically important to the long-term growth of RBC Financial Group's banking and wealth management businesses," said RBC Financial Group executive Peter Armenio. "Following a review of our U.S. operations, we determined that the national mortgage business was not strategic to achieving our goals."

Two years ago RBC acquired the wholesale operations of Bank One. But massive fraud and thousands of layoffs had cast a shadow over the operation.

New Century, a real estate investment trust, reported $42.2 billion in production last year and $10.2 billion during the first quarter of this year.

"This purchase...is an excellent strategic, operational and financial fit for us as it enables us to move towards our goal of ranking among the top 10 U.S. mortgage originators," said New Century Chairman and CEO Robert K. Cole in the announcement. "We look forward to leveraging RBC Mortgage's complementary experience in the prime, Alt-A and home equity line of credit business."

RBC Mortgage President and CEO Jonathan Threadgill will join New Century after the deal is done, the announcement said.

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