Top markets for affordable renovated housing inventory

Despite the rapidly deteriorating affordability, there is some hope for homebuyers in the form of renovated homes: properties that have been rehabbed into move-in ready condition after being purchased at auction.

HousingWire Magazine: December 2021/ January 2022

AS WE ENTER A NEW YEAR, let’s look at some of the events that we can look forward to in 2022. But what about what’s next for the housing industry?

Back to the Future of Mortgage Lending

This webinar will be a discussion on understanding what’s to come in the future of mortgage lending by analyzing past trends in the industry, evolving consumer behaviors and demographics of the industry’s production capacity.

Logan Mohtashami on Omicron and pending home sales

In this episode of HousingWire Daily, Logan Mohtashami discusses how the new COVID variant, Omicron, will impact inflation and whether or not it will send mortgage rates lower.

MortgagePolitics & Money

Citizens Bank buying Franklin American Mortgage for $511 million

Citizens claims deal will push bank into nation’s top 15 mortgage companies

Citizens Bank is about to significantly grow its mortgage business, announcing Thursday that it reached a deal to acquire Franklin American Mortgage Company in a $511 million deal.

Tennessee-based Franklin American has sizable mortgage origination and servicing operations. According to details provided by the company, Franklin American currently manages a $41.4 billion servicing portfolio and is on track to originate more than $13.7 billion in mortgages this year, nearly all of which are conforming mortgages.

In a release touting the acquisition, Citizens said that the deal will triple the size of its off-balance sheet mortgage servicing portfolio and more than double its mortgage origination platform.

The deal will also diversify Citizens mortgage origination channels, adding Franklin American’s correspondent and wholesale operations to Citizens’ retail footprint.

All in all, Citizens expects the deal to position the bank as one of the country’s top-15 bank-owned mortgage servicing and origination companies.

Additionally, Citizens will increase its existing off-balance sheet portfolio from $20.2 billion to approximately $61.6 billion. Once the deal is completed, Citizens total portfolio will check in at approximately $78.9 billion, including Citizen’s existing on-balance sheet mortgage portfolio.

Citizens also expects to add approximately 200,000 servicing households, more than 600 correspondent relationships, and more than 1,000 wholesale-broker relationships as part of the deal.

And beyond opening up new mortgage origination channels, Citizens also expects that the deal will improve its mix of conforming originations from approximately 45% to approximately 85%.

Franklin American currently has approximately 900 employees and Citizens said that it expects to “maintain a significant presence in Tennessee and Texas associated with the expanded distribution platform of the combined business.”

Under the terms of the deal, Citizens Bank will purchase assets with a net book value of approximately $488 million, which includes a mortgage servicing rights portfolio valued at $550 million, for $511 million in cash, or approximately 1.1 times tangible book value.

“This transaction takes our mortgage business to the next level, expanding our reach and adding immediate scale in servicing as well as innovative correspondent and wholesale solutions,” Brad Conner, Citizens vice chairman and head of consumer banking, said. “Franklin American Mortgage’s strong history of excellence in customer service is a great cultural fit with our organization and we are excited to welcome a new group of colleagues to Citizens.”

The combined mortgage business will be led by Eric Schuppenhauer, who currently serves as Citizens’ president of home mortgage.

Upon completion of the deal, Franklin American’s chief financial officer and chief operating officer, Scott Tansil, will lead the acquired correspondent and wholesale origination businesses headquartered in Franklin, Tennessee.

“We view this transaction as an opportunity to add scale and capital to the outstanding platform and customer-centric culture that our employees have created,” said Dan Crockett, Franklin American’s owner, president and CEO.

“Citizens shares our deep and enduring focus on delivering for customers, as well as our strong commitment to colleagues and communities, which Franklin American Mortgage employees have long embraced,” Crockett added. “Together, we’ll be able to increase our positive impact on customers and grow the business platforms that are a great source of pride for us.”

Going forward, Crockett will remain involved in the business, serving in an advisory role with Citizens Home Mortgage.

Citizens Chief Financial Officer John Woods noted the deal’s financial benefits for the bank.

“We are extremely pleased with the financial and strategic opportunities the acquisition of Franklin American Mortgage creates for Citizens,” Woods said.

“This transaction fits perfectly with our objective of improving shareholder returns and delivering against our key strategic imperatives. The combined platform will provide significant additional fee income opportunities with enhanced channel diversification, as well as opportunities to realize efficiency gains,” Woods added.

“The transaction is expected to be modestly accretive to second half 2018 and approximately 3% accretive to 2020 earnings per share, with an earnback period of less than three years,” Woods said. “Additionally, our strong capital position provides us the flexibility to support continued organic growth across our platform and attractive capital returns to shareholders, while still remaining opportunistic around compelling acquisition opportunities in the fee income space.”

The companies expect the deal to close in the third quarter of this year.

Most Popular Articles

FHFA: Government to back mortgages up to $970,800 in 2022

The FHFA today announced the baseline conforming loan limit for 2022 will be $647,200, an increase of 18%. In high-cost areas, the new ceiling loan limit will be $970,800.

Nov 30, 2021 By

Latest Articles

What Omicron, bond market and jobs mean for housing

We often have two to three job reports per year that miss estimates badly. However, remember that we have over 10 million job openings.

Dec 03, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please