Ann Arbor based University Bancorp owns 100% of University Bank and University Bank owns 80% of Houghton, Michigan-based Midwest Loan Services, which specializes in mortgage subservicing.
At December 31, 2010, Midwest Loan Services, was subservicing 63,073 mortgages. This has increased 31% per year on average for the past 11 years. About 95% of Midwest’s mortgages are subserviced for credit unions. The rapid growth of Midwest is due to both increases from existing credit unions and additions of new credit unions. Midwest is currently subservicing mortgages for 260 credit unions or 2.7% of all credit unions nationwide.
Growth of Midwest Loan Services. (PDF)
Website: www.midwestloanservices.com
Midwest specializes in the origination, servicing and subservicing of mortgage loans primarily for the credit union industry. Most of their servicing and subservicing portfolio is comprised of residential mortgage loans sold to Fannie Mae, Freddie Mac and loans held by portfolio lenders.
Midwest was founded in mid-1992. The President of Midwest Loan Services, Ed Burger, was previously the manager of D&N Bank's mortgage servicing operations, which had over 20,000 loans with a balance of $2,000,000,000 in mortgages serviced for its own account. When D&N Bank ran into financial trouble and sold its mortgage servicing rights to increase its capital base, Ed prepared a business plan for the management of D&N Bank to go into mortgage subservicing for other financial institutions using the employee skills and resources that had been developed in D&N Bank’s servicing operation. When his plan was turned down and the servicing staff let go, he sought out another local bank as a partner and initially, Midwest Loan Services was an 80% owned subsidiary of Houghton Financial, the parent company of Houghton National Bank.
In late 1993, Houghton Financial was sold to MFC Financial in Marquette but MFC Financial was not interested in the subservicing business. The withdrawal of his partner forced Mr. Burger to find a new partner. Bay Mortgage, a California-based mortgage brokerage firm purchased 67.7% of the company, with Mr. Burger retaining 33.3%.
On December 1, 1995, University Bank acquired 80% of the common stock of Midwest Loan Services by buying out Bay Mortgage and purchasing some of Mr. Burger’s shares. Mr. Burger retains 20% ownership of Midwest Loan Services. Since that time Midwest Loan Services has grown rapidly and now services over 68,000 loans representing over $9.7 billion in mortgages. Midwest Loan Services is currently the largest non-governmental employer in Houghton, Michigan. |
