Dec. 10 (Bloomberg) -- Credit-Based Asset Servicing and Securitization LLC, a subprime mortgage investor written off by its owners, completed the sale of its Litton Loan Servicing business and named Goldman Sachs Group Inc. as the buyer.
The sale allowed C-Bass to reach an out-of-court restructuring with its creditors, the New York-based company said in a statement today. Litton deals with homeowners on behalf of mortgage companies if the borrowers don't pay their bills on time. While terms weren't announced today, Radian Group Inc., part owner of C-Bass, said last month the unit would be sold for about $467.9 million to an unnamed acquirer.
Goldman, the world's largest securities firm, may be betting it can pick up Litton at a depressed price. C-Bass's owners wrote off their entire equity investment of more than $900 million this year, even while Litton continued to operate. Chief Financial Officer David Viniar said in September that his firm was hunting for ``distressed assets.''
Subprime loans are made to people who have weak credit. With home lenders refusing to refinance borrowers who might default, ``the loans stay in the portfolio longer, making them more valuable,'' Richard Bove, an analyst at Punk, Ziegel Co., said in an interview last month when the Litton sale was announced.
Litton is based in Houston and has more than 1,000 employees servicing more than 400,000 U.S. customers, the statement said.
Why Goldman Bought
C-Bass was among more than 100 mortgage lenders and investors forced to halt operations or find buyers in 2007 amid the worst housing slump in 16 years. Its majority owners were MGIC Investment Corp. and Radian, the nation's No. 1 and No. 3- ranked mortgage insurers.
Blackstone Group LP advised C-Bass, which received legal counsel from Hunton and Williams.
Katie Monfre, a spokeswoman for Milwaukee-based MGIC, Tim Lynch a spokesman for Philadelphia-based Radian, and Peter Cerwin, a spokesman for New York-based C-Bass, didn't return voicemail messages left after business hours.
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2 comments:
Goldman bought the company because it's a recognized leader in the loan-servicing sector.Given the stress in the residential mortgage market, a premium is being placed on quality workout-servicing capabilities, for which Litton is very well-known.
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