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Wells to Become Largest Processor of Mortgages With GE Acquisition

September 13, 2000|From Bloomberg News

Wells Fargo & Co. on Tuesday agreed to buy most of General Electric Co.'s mortgage business and to collect its loan payments, becoming the biggest U.S. processor of mortgage bills.

Terms weren't disclosed. The Wells Fargo Home Mortgage unit will administer $78.6 billion in loans for GE Capital Mortgage Services. San Francisco-based Wells Fargo will buy GE's mortgage processing facility and its loan origination business, as well as its loans awaiting approval.

With the acquisition, Wells Fargo, the seventh-biggest U.S. bank, will process more than $400 billion worth of mortgages for more than 3.8 million homeowners. The company finances about one out of every 15 U.S. home loans and has been adding to its mortgage business. It bought the rights last week to service First Union Corp.'s $35.7-billion mortgage portfolio.

Prudential Securities banking analyst Nancy A. Bush said the acquisition makes sense because Wells Fargo has excess capacity in its mortgage servicing unit and it can run the business more efficiently than a company such as General Electric, which has a much smaller portfolio of loans.

Fairfield, Conn.-based General Electric, the world's biggest non-bank financial company, said the sale would let it focus on mortgage insurance and related businesses. The companies said they expect to complete the transaction by October.

On the New York Stock Exchange, Wells shares rose 6 cents to close at $46.13 and GE shares fell 63 cents to close at $59.06.

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