Investor Group Closes $80 Million Deal To Purchase Urban Financial

An investor group led by a former Walter Investment Management executive closed an agreement Monday to purchase Urban Financial of America (UFA) from KCG Holdings (NYSE: KCG) for approximately $80 million in cash and retained net assets.

Under the terms of the deal, previously announced in July, former Walter Investment Management Chief Strategy Officer Brian Libman is the lead on the acquiring investor group. He has resigned his position from Walter and its subsidiaries and will hold the position of Executive Chairman and primary shareholder of UFA.

Walter has invested approximately $15 million in UFG Holdings, a company controlled by the investor group, in the form of an unsecured loan with warrants entitling Walter to purchase up to 19% of the common units of Urban. Its affiliate, Reverse Mortgage Solutions, Inc., is negotiating a forward flow agreement to purchase mortgage servicing rights originated by Urban, according to a company filing with the Securities and Exchange Commission.

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The completion of the sale by KCG Holdings is among a series of sales, restructurings and closures that will refocus KCG on its core business channels including market making and electronic trading services, the company says. Since merging with Getco LLC, KCG has sold several business units including the sale of a bond trading unit to Stifel Financial in early July.

Tulsa, Oklahoma-based Urban has long operated as one of the largest reverse mortgage lenders, comprising the largest wholesale division in the industry as well retail operations. The company restated its commitment to the reverse mortgage business upon the announcement of the deal in July. Urban completed a name change from Urban Financial Group to Urban Financial of America and rebranding of its marketing materials in November.

Written by Elizabeth Ecker

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  • In a post dated August 12th, 2012, Elizabeth wrote: “A $400 million loss on the part of Urban Financial’s parent company, Knight Capital, over the last week, caused many people in the reverse mortgage business to wonder: Will this be the last shoe to drop?”

    The shoe has now dropped. Now it seems Walter not only has acquired RMS and S1L but now also has de facto control over Urban as well.

    So what does the balance sheet of Urban look like? It seems Urban will not be required to file any SEC filings, so unless that changes all of that information will remain internal except to the extent Getco discloses that information in its SEC filings.

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