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Fate of Wachovia, Wells Fargo Multifamily Capital Still to Be Determined
Published: October 06, 2008
By Anuradha Kher, Online News Editor
New York--Earlier this week, Wachovia Corp. agreed to be acquired by Wells Fargo & Co. in a $15.1 billion all-stock deal, following which Wachovia’s previous plan to sell its banking operations to rival suitor Citigroup Inc. fell apart.
Both Wachovia Capital and Wells Fargo have multifamily divisions and are Fannie Mae and Freddie Mac DUS (Delegated Underwriting and Servicing) lenders. In addition, early this year, Wachovia Multifamily Capital Inc. achieved fully delegated status under the Freddie Mac Delegated Underwriting for Targeted Affordable Housing model.
The two companies were also the top multifamily/commercial originators in 2007, according to the Mortgage Bankers Association (MBA) fourth annual ranking of commercial/multifamily finance firms annual originations .
“The announcement creates one of the strongest financial firms in the world and is great for all Wachovia constituencies: our shareholders, customers, colleagues and communities,” Robert K. Steel, president and CEO of Wachovia Corp., said in a statement following the buyout. “This deal enables us to keep Wachovia intact and preserve the value of an integrated 3 company, without government support."
But questions about Wachovia Multifamily Capital remain undetermined for now. No decision has been taken yet to leave or remove Wachovia as a Fannie Mae DUS lender (Wells Fargo is also a DUS lender). A Fannie Mae spokesperson said it is "too early to tell" in light of the recent legal contentions between Wells Fargo and Citibank. Meanwhile, Eileen B. Fitzpatrick, senior communications specialist at Freddie Mac, told MHN the decision on how Freddie will list Wachovia as its Seller/Servicer, has not been made yet.
When MHN asked the question about Wachovia Multifamily Capital’s fate, Wells Fargo sent the following statement in an email. “We don't have anything further to contribute beyond what we've said in our recent public statements.”
Meanwhile, Citigroup has filed a lawsuit, prompting a New York judge on Saturday to temporarily block the sale of Wachovia to Wells Fargo. However, on Sunday, a state appellate court threw out that ruling. Also on Sunday, Wachovia filed a lawsuit asking a federal judge to declare its agreement with Wells Fargo valid. U.S. District Judge John Koeltl denied that request but set a hearing for Tuesday on the enforceability of the letter agreement that Citigroup says precludes the Wells Fargo bid.
