Ross to pay Citi $1.5B to service loans
American Home Mortgage Servicing has acquired the rights to 185,000 home loans from Citi.
NEW YORK (CNNMoney.com) -- American Home Mortgage Servicing Inc., owned by vulture investor Wilbur Ross, will pay Citigroup $1.5 billion for the rights to service 185,000 home loans, Ross said Thursday.
"With this acquisition, we have increased the number of loans we service to approximately 575,000, an increase of 45%," said David Friedman, Chief Executive Officer. "The loans are a great fit with our existing portfolio, and we look forward to serving a new group of homeowners."
The Irving, Texas-based home loan servicing company is one of the country's largest servicers of Alt-A and subprime loans in the country.
Ross, who acquired American Home out of bankruptcy last year, is best known for buying and selling troubled steel and auto companies. Over the past year, he has taken stakes in financial companies, such as bond insurer Assured Guaranty (AGO), and H&R Block's (HRB) subprime mortgage servicing unit.
The rising cost and declining availability of credit since the credit crisis began in late 2007 has made acquiring low-cost bank funding a top priority for investors of all stripes, Ross told CNNMoney.com earlier this month.
For Citigroup (C, Fortune 500), the deal comes after a decision last month to split into two companies and streamline its operations. Getting away from its "universal banking" strategy, Citi has begun to shed less-profitable units in an effort to raise capital. 
-
The Becerras spoiled themselves with a puppy. Here's what 6 other readers are indulging on. More -
Santa is no part-time gig for these St. Nicks. Meet the hardest working Santas in the business. More -
More people can't afford their pets, and shelters struggle to keep up with the influx. Play -
The house on Hawaii's big island should fetch near $12 million. More -
Small automakers are beating the Big 3 in the race for sweet new rides. More -
Lauren Bush's FEED project lands her on Fortune's Most Powerful Women Entrepreneurs list. More -
Production is starting on the world's most luxe ocean liner: The Utopia. More
