Barclays Plc. announced yesterday that it concluded an agreement to purchase HomEq Servicing Corp. from U.S. bank Wachovia Corp. for $469 million.
HomEq Servicing Corporation, based in North Highlands, Calif., collects mortgage payments from sub-prime borrowers who usually have blemished credit histories.
Barclays said it will pay for HomEq's business with cash and will use the newly acquired company to bolster its mortgage-backed securities business in the United States, which it began to build in 2004.
"It has become clear during the last year that HomEq's long term prospects for success would be better served by a broader strategic approach to the sub-prime mortgage sector," said Mary Beth Navarro, spokeswoman for Wachovia. "That approach to HomEq is not consistent with Wachovia's strategic direction."
Charlotte, N.C.-based Wachovia, the fourth largest U.S. bank, agreed to pay $25.5 billion last month for Golden West Financial Corperation, a savings and loan in Oakland, Calif. (InvestmentNews, May 8) .