Category Archives: Servicing

Forestar preparing to spurn Starwood Capital after D.R. Horton improves its offer

Thanks to a bidding war between two real estate giants, Forestar Group, a residential and mixed-use real estate developer, and its shareholders find themselves squarely in the catbird’s seat.

As recently as one day ago, Forestar said that it still planned to sell itself to Starwood Capital Group for $15.50 per share (or approximately $658 million), despite D.R. Horton attempting to swoop in and buy 75% of the company for a higher price, $16.25 per share (or approximately $520 million).

That came after Starwood increased its initial offer for Forestar from $14.25 per share to $15.50 per share as it tried to fend off D.R. Horton’s unsolicited bid for control of the company.

But things can change quite a bit in 24 hours.

On Thursday, Forestar announced publicly that its board was considering both companies’ offers, and may determine that D.R. Horton’s bid is superior.

Now, it appears that Forestar’s public negotiation proved successful, as the company announced Friday morning that both companies increased their offers for the company, with D.R. Horton increasing its bid enough that Forestar now plans to spurn Starwood’s offer and sell to D.R. Horton.

According to both Forestar and D.R. Horton, the homebuilder increased its bid from $16.25 per share to $17.75 per share, which would increase the purchase price for 75% of Forestar from $520 million to $568 million.

In a release, Forestar said Friday that its board unanimously determined that D.R. Horton submitted a “Superior Proposal,” which it now plans to accept instead of Starwood’s offer.

Forestar said that it notified Starwood on Friday about D.R. Horton’s increased offer and its intentions to terminate its merger agreement with Starwood and enter into a new acquisition agreement with D.R. Horton.

In a release of its own, D.R. Horton said that the company is very pleased with Forestar’s decision.

“We are pleased that the Forestar Board has determined that our revised offer constitutes a ‘Superior Proposal,’ and we look forward to completing this transaction as quickly as possible in the best interests of the Forestar and D.R. Horton shareholders,” Donald Horton, D.R. Horton’s chairman of the board, said.

“This transaction advances D.R. Horton’s strategy of increasing our access to high-quality optioned land and lot positions and will allow us to significantly accelerate Forestar’s growth into a leading national land developer,” Horton continued.

“Forestar’s shareholders will receive superior and immediate cash value, along with the opportunity to participate in significant value creation over the long term,” Horton added. “This strategic alignment will enable both companies to enhance their operational efficiency and returns.”

But things aren’t done and dusted quite yet.

Forestar said that Starwood also increased its offer for the company from $15.50 per share to $16, but the company currently prefers the offer from D.R. Horton.

But Forestar said in its release that it still plans to discuss and negotiate with Starwood in good faith, if Starwood so chooses, over “adjustments” to its merger agreement with Starwood that could lead to the company not accepting the D.R. Horton offer after all.

Those “adjustments” would likely be Starwood increasing its offer again, if the company wants to.

Starwood has already increased its offer from $14.25 per share to $15.50 and now to $16 per share, and it appears that Forestar is going to try to see if Starwood is willing to up the ante again.

Forestar said that it will negotiate with Starwood until the end of the day on June 28 before determining which offer to move forward with.

All of this back and forth has been a boon for Forestar’s shareholders as the company’s stock has risen substantially throughout the entire negotiation process.

Back on June 2, Forestar closed at $14.20 per share. In the wake of the initial offers from Starwood and D.R. Horton, the company’s stock shot up to $16 per share on June 5.

And the stock has been steadily rising since then too. As of 12:06 pm Eastern on Friday, June 23, the company’s stock was up more than $1 for the day, climbing to $17.65.

Back in November, the company’s stock was trading at less than $11 per share.

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loanDepot expands executive leadership team, adding two new EVPs

loanDepot has announced an expansion of its executive leadership team with the creation of two new positions.

loanDepot has appointed Eric Gutierrez as its executive vice president of marketing and Pat Flanagan as executive vice president of Next Generation Lending. Both Guitierrez and Flanagan will report to CEO Anthony Hsieh.

“I’m pleased to welcome Eric and Pat to loanDepot’s leadership team as we set the pace for modern lending,” said Hsieh. “They’ll help loanDepot continue to redefine the mortgage lending category – going from what used to be a manual, paper-based, once every seven years transaction, to a next-generation digital relationship that covers all aspects of consumer lending and homeownership.”

The company said in a press release that the expansion of the leadership team will help the company leverage its proprietary, digital-lending platform, mello, to support its continued growth into new categories of products and services.

Gutierrez (pictured below, bottom) has nearly 20 years of experience marketing top national digital and home finance brands to loanDepot; his previous work includes LendingTree and AOL. As loanDepot’s first executive vice president of marketing, Gutierrez will partner closely with the nonbank lender’s product, business development, technology and capital markets leadership teams to drive cross-platform innovation.

Flanagan (pictured below, top) is loanDepot’s first executive vice president of Next Generation Lending. He will lead the development of a broad suite of proprietary lending products within both RESPA and non-RESPA consumer lending. 

Flanagan brings more than 25 years of leadership experience to loanDepot, including expertise across securitization, capital markets, origination, acquisition, and management of more than $200 billion of residential mortgage and residential real estate-related assets.

Before joining loanDepot, Flanagan held leadership roles at Carrington Mortgage Services, Waterfall Asset Management and Cove Financial Group.

(Pat Flanagan)

(Eric Gutierrez)

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Housing industry’s largest trade groups want CFPB director replaced by bipartisan commission

More than 20 of the housing industry’s largest trade groups are calling on Congress to enact legislation that would change the leadership structure of the Consumer Financial Protection Bureau from a single director to a bipartisan commission.

The CFPB’s concentration of power at the director position has long been a source of contention for the opponents of the CFPB.

Recently, the House of Representatives voted to pass the Republican-crafted Financial CHOICE Act, which would abolish the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Dodd-Frank created the CFPB and established how the bureau would be structured.

The version of the Financial CHOICE Act that passed in the House would change the structure of the CFPB to make the director fireable at will by the president, rather than for cause only, as it stands now.

The original version of the Financial CHOICE Act called for a change to the CFPB’s structure that would end the single director and change it into a bipartisan independent Commission serving staggered terms, but that stipulation didn’t make it into the updated Financial CHOICE Act.

And while the ranking member of the House Financial Services Committee Rep. Maxine Waters, D-Calif., went on record saying the bill is “dead on arrival in the Senate and has no chance of becoming law,” that’s not stopping the housing industry from pushing for a big change to the CFPB.

In a letter sent Thursday to the leadership of the appropriations committees in both the House and Senate, the groups ask for Congress to pursue legislation that would allow a bipartisan commission to run the CFPB.

“The undersigned trade associations representing thousands of banks, credit unions, financial institutions, and businesses of all sizes that serve America’s consumers write to express our strong support for the inclusion in the Senate and House Financial Services General Government Subcommittee FY2018 bills, language that would transition the governance structure of the Consumer Financial Protection Bureau to a five person bipartisan commission,” the letter begins.

The letter is signed by the following organizations: ACA International, the American Bankers Association, 
the American Escrow Association, the American Financial Services Association,
 the American Land Title Association,
 Community Mortgage Lenders of America, 
the Consumer Bankers Association, 
the Consumer Data Industry Association,
 the Consumer Mortgage Coalition, 
the Credit Union National Association, 
Electronic Funds Transfer Associations, 
the Electronic Transactions Association, 
the Financial Services Roundtable,
 the Independent Community Bankers of America, the Mortgage Bankers Association, 
the National Association of Federally-Insured Credit Unions, the National Association of Realtors, the National Black Chamber of Commerce, 
the National Federation of Independent Business,
 the Real Estate Services Providers Council, Inc., the Small Business Entrepreneurship Council, and The Realty Alliance.

The groups write that a Senate confirmed, bipartisan commission leading the CFPB will “provide a balanced and deliberative approach to supervision, regulation, and enforcement for consumers and the financial institutions the CFPB oversees by encouraging input from all stakeholders.”

The groups stated that the CFPB’s current structure “leads to regulatory uncertainty and instability for consumers, industry, and the economy, leaving vital consumer financial protection subject to dramatic political shifts with each changing presidential administration.”

Additionally, the groups say that having the CFPB led by bipartisan commission would make the agency’s structure more like other financial regulators, like the Securities and Exchange Commission and the Federal Reserve System.

The groups also cite a recent poll that states that 58% of registered voters in battleground states believe that the CFPB should be led by a commission rather than a single director.

It should be noted that the poll was commissioned by three of the groups that sent the letter, the Consumer Bankers Association, the Independent Community Bankers of America, and the American Land Title Association.

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