Fieldstone Investment Corp. being bought in $260M deal

Credit-Based Asset Servicing and Securitization LLC and Radian Group Inc will acquire Fieldstone Investment Corp. in a $260 million deal.

The deal values Columbia-based Fieldstone at $5.53 per share, a 112 percent premium from its Thursday closing stock price of $2.60, Fieldstone originates, sells and services residential mortgage loans. Fieldstone saw its stock almost double on the news Friday morning, climbing 96 percent to $5.11.

The union aids Credit-Based Asset Servicing and Securitization — a New York-based firm known as C-BASS and an affiliate of MGIC — in its strategy to align with companies holding significant mortgage security investments. C-BASS’s Litton Loan Servicing division can boost the underlying value of those securities, executives said.

The transaction is expected to close during the second quarter.

"This transaction represents an excellent opportunity for C-BASS and strengthens the depth of our organization. We look forward to working with Fieldstone on enhancing their loan programs through our proprietary analytics and the skill of Litton Loan Servicing," said C-BASS COO John Draghi in a statement. "We believe that Fieldstone’s origination business will be stronger as a result of our affiliation, and we look forward to the opportunity to acquire a portion of Fieldstone’s loans for the C-BASS portfolio on an ongoing basis."

Fieldstone CEO Michael J. Sonnenfeld said in a statement the transaction "is the best opportunity for our stockholders to recognize value in this very challenging time in the non-prime mortgage industry. We believe that we will be more successful building our origination business by integrating our platform with C-BASS and Litton and their industry leading analytics, servicing and loss mitigation capability."

Most of the loans Fieldstone originates are "non-conforming," meaning they do not meet the guidelines of mortgage giants Fannie Mae and Freddie Mac. The loans could be too large or require less of a down payment than Fannie and Freddie accept.

Last April the company said it would restate earnings going back to 2003 to correct accounting errors.