Steel tycoon and U.S. billionaire investor Wilbur Ross, dubbed the “King of Bankruptcy”, has the winning bid to take over the loan servicing unit of bankrupt lender American Home Mortgage Investment Corp.
Last month, sources said Ross had offered up to $435 million for the unit, and apparently the company had received no higher offers prior to an auction scheduled for Friday, leaving Ross the winner.
Late last month, Wilbur L. Ross Jr. formed a new company, AH Mortgage Acquisition, in the hopes of snatching up American Home Mortgage’s $45.3 billion servicing unit.
Ross intends to use the servicing acquisition as a springboard to delve into all things mortgage, saying that he would get into home lending after “a while”, and pursue additional opportunities as well.
“While you can’t originate subprime mortgages right now and make a profit, servicing is still a profitable business and is still the underpinning we would eventually need to be in the overall mortgage business,” Mr. Ross said last month of his decision to bid on American Home.
American Home closed its doors in August, laying off 6,250 employees, citing mounting margin calls, secondary market disruptions, and a deteriorating housing market for its demise.
American Home Mortgage was founded in 1987, and had become the 10th largest U.S. retail mortgage lender by 2006, originating $59 billion in loans last year.