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To: QuietWon who wrote (26210)	12/11/1998 9:56:00 AM
From: BarbaraT	Read Replies (1) \| Respond to of 119973

ALERT: CMO This news came out after the close yesterday ... just opened for trading. GMAC to Buy Capstead's Mortgage Banking Business for $550 Mln Dallas, Dec. 10 (Bloomberg) -- Capstead Mortgage Corp. said it will sell its mortgage-servicing businesses to GMAC Mortgage Group Inc., a General Motors Corp. lending unit, for more than $550 million in cash. Dallas-based Capstead, a mortgage banking firm that posted a third-quarter loss amid falling interest rates, said the sale of it $38 billion single-family home mortgage servicing portfolio and servicing business will produce a ''modest'' one-time gain in the fourth quarter. The transaction is expected to close in the first quarter of 1999. ''The decision to sell the mortgage banking operations reflects continued uncertainty relative to the financial markets, in particular the mortgage finance market,'' said Ronn Lytle, Capstead's chief executive, in a statement. ''We concluded that securing sufficient additional financing to continue to grow the mortgage servicing operation currently represents too great a risk for our stockholders.'' Minneapolis-based GMAC Mortgage said it will transfer 400,000 loans from Capstead's portfolio to its servicing facilities in Pennsylvania, Iowa and California. It also expects to hire most of the employees of Captstead's servicing business. The acquisition boosts GMAC Mortgage's servicing portfolio to 1.5 million loans. Capstead reported a net loss after charges of $11.8 million in the third quarter as low interest rates hurt the value of its mortgage-related holdings. Mortgage rates near 30-year lows have prompted homeowners to rush to refinance their loans. Those refinancings can lead to prepayments on mortgage-backed securities, hurting investors' returns. ''The sale significantly bolsters the company's balance sheet and reduces its exposure to further declines in short-term interest rates,'' Lytle said. Capstead will focus its investment portfolio on higher-quality mortgage-backed securities, he said. Capstead shares were unchanged at 3. They have declined 85 percent this year. General Motors shares were unchanged at 69 1/16. The sale was announced after the close of trading. 19:22:25 12/10/1998 Any redistribution of Bloomberg content, including by framing or similar means, is expressly prohibited without the prior written consent of Bloomberg L.P. Any reference to the material must be properly attributed to Bloomberg News. The information herein was obtained from sources which Bloomberg L.P. and its suppliers believe reliable, but they do not guarantee its accuracy. Neither the information, nor any opinion expressed, constitutes a solicitation of the purchase or sale of any securities or commodities.(C) Copyright 1998 Bloomberg L.P. BLOOMBERG, Bloomberg News, Bloomberg Financial Markets, Bloomberg Television, Bloomberg News Radio are trademarks, tradenames and service marks of Bloomberg L.P.