Ending months of speculation about its future, mortgage lending giant DiTech Funding Corp. of Irvine said Monday it agreed to be acquired by GMAC Mortgage Corp., a unit of General Motors Corp.
Terms weren't disclosed. DiTech, one of the Southland's largest mortgage lenders and an aggressive marketer of higher-risk home-equity loans, shelved an initial public stock offering last fall. It had hoped the IPO would raise about $110 million for a minority stake in the company.
The stock sale was postponed indefinitely, however, after the market for DiTech's subprime home-equity loans, which offer a borrower up to 125% of a home's value, crumbled amid a global credit crunch and disarray in the mortgage market.
The company began talking with GMAC, one of the largest buyers of its loans, about broadening their relationship last October.
The sale to GMAC "gives us all the capital we need to grow," said J. Paul Reddam, DiTech's chief executive and its TV pitchman, who will continue in those roles after the acquisition.
"I think it gives us a lot of stability for good times and bad and allows us to be more aggressive in our lending practices."
Reddam said there will be no layoffs at the 700-employee company, which will become a subsidiary of GMAC.
DiTech will implement a host of already-planned changes in the coming months, Reddam said.
They will include a move to new and larger offices in Costa Mesa and a name change to DiTech.com, to reflect the company's increased presence on the Internet.
By logging onto its Web site potential customers can apply for a loan and can learn whether they've been approved within minutes, without talking to a company representative. The site is http://www.ditech.com.
Industry experts said the acquisition will be good for both companies. The deal gives DiTech access to GMAC's much deeper financial resources.
"It gives them a balance-sheet partner among the largest corporations in the U.S. and puts them in excellent condition to continue the growth of their business," said Edward Carpenter, chairman of Carpenter & Co., an Irvine investment bank.
GMAC, meanwhile, gains a steady flow of new loans either to service or to sell. DiTech's loan volume hit a record $3.8 billion last year, a total the company hopes to double this year.
