1
EXHIBIT 99.2
NEWS RELEASE
-------------------------
SITRICK AND COMPANY, INC.
LOS ANGELES/NEW YORK
Contact: Sitrick And Company
Xxxxxxx Xxxxxxx
(000) 000-0000
Xxxxxxx Wool
(000) 000-0000
LOMAS FINANCIAL CORP. AND LOMAS MORTGAGE USA FILE CHAPTER 11;
AGREEMENT REACHED FOR SALE OF SUBSTANTIALLY ALL
REMAINING ASSETS OF LOMAS MORTGAGE
USA TO FIRST NATIONWIDE SUBSIDIARY
DALLAS, TX -- OCTOBER 10, 1995 -- Lomas Financial Corporation (NYSE:
LFC) and its mortgage banking subsidiary, Lomas Mortgage USA, Inc. (LMUSA),
today filed for protection under Chapter 11 of the federal bankruptcy code in
the United States Bankruptcy Court for the District of Delaware in Wilmington,
Delaware.
Concurrently, Lomas said that it has reached an agreement for the sale
of substantially all of the remaining assets of its mortgage banking
subsidiary, LMUSA, to a subsidiary of First Nationwide Bank for $150 million,
subject to certain adjustments, and the assumption of certain liabilities. The
sale is subject to, among other things, Bankruptcy Court approval. Lomas said
that a hearing date and timetable will be set by the Bankruptcy Court.
The company said the filing and the sale were necessitated by its
deteriorating financial condition and the resulting concerns of the federally
sponsored agencies -- GNMA, FNMA and FHLMC -- as well as private participants in
the mortgaged-backed securities industry, and the company's inability to access
the capital necessary to maintain its business.
1
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
(000) 000-0000 Fax: (000) 000-0000
2
In papers filed with the Bankruptcy Court, Lomas attributed its
financial difficulties primarily to the exceptionally high level of
refinancings of mortgages in its servicing portfolios between October 1991 and
August 1994, which caused a rapid run-off of its servicing portfolio. Unlike
many mortgage bankers, Lomas does not itself originate mortgage loans, but
rather buys loans from originators. As a result of the extremely high run-off
rate, Lomas was faced with increasing capital needs to replenish its portfolio,
and was forced to take write-offs of its servicing rights assets that caused
serious erosion of its net worth and adversely affected its ability to borrow
to finance its operations.
The papers said that Lomas and its advisors have considered a number
of different strategic alternatives including the sale of a majority of its
businesses to a third party. The company stated that the size of LMUSA's
mortgage servicing portfolio and the related income from mortgage servicing
fees have steadily declined over the past few years, while the debt servicing
obligations in respect of LFC's and LMUSA's unsecured debts have remained the
same. Lomas said its deteriorating financial condition caused the risk of
agency or private mortgage investor intervention, the threats of which recently
began to occur. As a result, the company said, it determined that it was
"necessary...to sell Lomas's operating businesses to maximize the value of those
businesses."
LMUSA agreed in early September to sell its GNMA mortgage servicing
and loan production businesses, and LMUSA is now seeking the Bankruptcy Court's
approval of a sale of substantially all of its remaining assets, pursuant to
section 363(b) of the Bankruptcy Code.
###
2
