Indianapolis-based Oak Street Mortgage LLC plans to leave the residential mortgage origination business as part of an agreement to sell 21 retail office locations and other assets to NovaStar Mortgage.
“A significant number” of Oak Street’s employees are expected to go to work for NovaStar when the deal closes in the fourth quarter of this year, the companies said in a press release.
Headquartered in Kansas City, Mo., NovaStar Financial Inc. specializes in nonconforming single-family mortgages. With the acquisition of Oak Street’s assets, NovaStar Mortgage will create a new retail division and expand its retail mortgage lending business beyond the current focus on customer retention programs, the company said. The purchase price was not disclosed, but the companies said it will be at a slight premium over the book value of the assets being acquired, plus an opportunity to earn payments over the next two years depending on the performance of the retail division.
“We expect this expansion into the retail market to enable us initially to increase loan production by $75 to $100 million a month,” said Lance Anderson, chairman of NovaStar Mortgage and chief operating officer of NovaStar Financial. “While Oak Street’s retail channel is already an efficient loan origination operation, the elimination of duplicate overhead should further reduce the cost of production.”
Oak Street will continue its commercial lending under the Oak Street Funding brand headquartered in the Indianapolis area. Founded in 1999, Oak Street does business in 36 states.
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