Legg Mason Inc. plunged further into commercial mortgage banking yesterday, announcing it had purchased the $1.6 billion mortgage-servicing division of Chevy Chase-based B. F. Saul Co.
"The addition of B. F. Saul Co.'s commercial mortgage division is a good strategic fit for Legg Mason," said Raymond A. Mason, the company's chairman.
"We are able both to increase our mortgage-servicing portfolio and add strong new mortgage-banking capabilities in the Virginia and Washington, D.C., area."
"The transaction is the sale of servicing rights to the loans, not the loans themselves," said Peter Sellwood, a B. F. Saul vice president who will become executive vice president of Legg Mason's mortgage-banking operation. "It brings a diversification of investors and resources" to the companies, he said.
The addition to Legg Mason's mortgage-banking operation, Latimer & Buck, brings the company's mortgage-servicing portfolio to $11.8 billion, Legg Mason spokeswoman Geraldine Leder said. Even before the deal, Latimer & Buck had the biggest commercial mortgage-servicing portfolio in the United States.
Mortgage-servicing companies collect loan payments on behalf of the investors who own the loans and provide other services. Most of the loans B. F. Saul's mortgage division services are owned by insurance companies, Legg Mason said.
Ms. Leder said the B. F. Saul mortgage unit and Latimer & Buck are profitable, but declined to give figures.
Legg Mason did not say what it paid for the B. F. Saul unit. Ms. Leder said the expanded operation would be known temporarily as Latimer & Buck/B. F. Saul.