Green Tree Servicing LLC, the manufactured housing lender and servicer formerly owned by Conseco Inc., continues to rebuild its operations by sifting through the wreckage of the manufactured housing market.
The St. Paul company has agreed to pay about $23 million to buy the servicing rights on $914 million of manufactured housing loans, including both performing and nonperforming assets, from the Bombardier Capital unit of Bombardier Inc. of Montreal.
The deal was announced Monday and is expected to close between February and April. Green Tree would not retain the Colchester, Vt., company's servicing platform or the manufactured housing unit's 125 employees in Jacksonville, Fla.
Bombardier took a $16.8 million hit from the deal in the quarter that ended Oct. 31.
Thomas J. Franco, the president of Green Tree's manufactured housing division, said in an interview Monday that servicing manufactured housing loans is his company's "core competency" and noted that its $22 billion portfolio is the largest dedicated to this loan type.
He added that Green Tree services loans for others as well, including Fannie Mae.
Most of the portfolio - $900 million - spans seven securitizations of loans made between 1998 and 2001. A spokeswoman for Bombardier said the other $14 million of loans reside on the Bombardier's balance sheet.
A group of opportunistic investors bought Green Tree from the bankrupt Conseco in 2003. The Bombardier agreement is the second large deal Green Tree has made in the last 12 months or so.
In October 2004 it agreed to pick up GreenPoint Credit LLC, including its manufactured housing servicing platform and $8.6 billion portfolio, from North Fork Bancorp, which bought GreenPoint Financial Corp. on Oct. 1.
Mr. Franco said that because the Bombardier deal is smaller, Green Tree does not need to acquire the seller's employees, as it did with GreenPoint.
Green Tree has been less successful in bidding for big packages of whole loans.
For instance, Mr. Franco said, "we bid and lost our bid" to Clayton Homes, a unit of Warren Buffett's Berkshire Hathaway Inc., for JPMorgan Chase & Co.'s manufactured housing portfolio in 2004.
He said Berkshire Hathaway is "very active" in whole-loan bidding.
"We are competing against them in many ways with regard to whole-loan purchases of assets and servicing rights," he said.
He made a case for the strength of Green Tree's servicing operation. "It's clear to constituents such as the Fannie Maes of the world who have been very engaged in our business" that Green Tree is "one of the lowest-cost servicers in the U.S." for manufactured housing loans, he said.
Mr. Franco added that his company plans to "go out there and compete aggressively" for servicing. He said its expertise is augmented by its 40 years' worth of performance data on manufactured housing loans, and that it has good economies of scale.
Ken Roberts, a manufactured housing consultant in St. Paul, worked in 1993 at the former GreenTree Financial, which Conseco bought in 1998. He called the Bombardier deal "a good move" for Green Tree.
"That was a portfolio of high delinquencies, but they've run it down," Mr. Roberts said. "They had done a very good job of bringing it under control, and I'm sure by now the steam is out of it."
For Bombardier the Green Tree deal concludes a series of events that began in late 2001, when the company announced it would no longer originate manufactured housing loans because of the market's troubles.
Bombardier is the latest in a string of companies forced out of manufactured housing. Like several others, it entered the business when it was red hot in 1997.
