What JPMorgan Didn’t Get: Lone Star Picks Up Bear Res

(Update 2: Adds confirmation from Lone Star; adds confirmation on EMC Mortgage)

As JPMorgan Chase & Co. (JPM: 32.27 -4.44%) formally brings Bear Stearns Cos. into the fold on Friday, one key aspect of the former Wall Street giant won’t be crossing over — Bear Stearns Residential Mortgage Corporation, commonly known as Bear Res.

An internal memo obtained Friday morning by Housing Wire, dated May 30, said that an affiliate of $13.3 billion private equity firm Lone Star Funds, LSF5 Mortgage Operations, LLC, had acquired the Bear Stearns’ wholesale and correspondent lending operation. Lone Star already has a mortgage footprint, having purchased subprime lender Accredited Home Lenders, Inc. in October of last year, in a deal worth an estimated $296 million.

Lone Star spokesman Ed Trissel confirmed the contents of the memo Friday morning, saying that Lone Star had “acquired certain operating assets and rights to certain operating assets of Bear Stearns Residential Mortgage Corporation.”

The memo said that “the majority of the former employees of Bear Res will be offered employment by LSF5 Mortgage Operations, LLC, or … affiliated entities such as Accredited Home Lenders.” Employees may be leased to Accredited, as well.

The memo notes that LSF5 is in the process of applying for the permits “needed to operate as an independent origination and servicing business for its own account,” and that all Bear Res applications will be originated and funded through Accredited until the permit process is complete.

Sources confirmed to Housing Wire late Friday that the sale of Bear Res does not include Lewisville, Texas-based EMC Mortgage Corp., the captive servicing arm associated with ill-fated Wall Street firm.

The move by Lone Star certainly will raise eyebrows among those in the industry — not only because it appears to be setting up Bear Res separately from Accredited’s own operation, but also because it appears to be building a separate captive servicing platform as well.

Disclosure: The author held no positions JPM when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.