Spring Mountain Expands in Deal for B of A Escrow
Spring Mountain Escrow Corp., which bills itself as the nation’s largest independent escrow company, Tuesday announced a major thrust into the Northern California market with the purchase of Bank of America’s escrow business.
Terms of the transaction were not disclosed.
Spring Mountain, based in Newport Beach, said it will open 20 new offices in Northern California by the end of the year. The privately held company, which had revenue of $15 million last year, currently has 47 offices, all but four of them in Southern California, said President Christine M. Sanderson.
“The timing was very appropriate,” Sanderson said. “We had made a decision to go into Northern California, we were already positioning ourselves, and then Bank of America and Wells Fargo decided to get out of the (escrow) business. It’s a tremendous opportunity.”
She said the company had considered purchasing Wells Fargo Bank’s escrow business but decided against it, and that operation was later shut down.
Bank of America has closed 17 of its 18 escrow service offices over the past several months, with only the San Francisco office remaining open to handle depository and holding escrows, which are used mostly for transactions between corporations. Bank of America escrow clients will be served by existing Spring Mountain offices in Southern California and the new offices in Northern California.
A Bank of America spokeswoman said only that the real estate escrow operations “don’t fit into our current business plans.” She declined to say how much business the escrow operations have generated for the bank.
Escrow companies hold money or other property connected with a sale of real estate until the conditions of the sale agreement are met.
Sanderson said the residential real estate transactions are handled differently in Northern California than in Southern California, with one result being that the escrow business in the north is dominated by title companies. But she said that because those companies are mainly interested in selling title insurance, they are not well positioned to handle a large volume of escrow business.
Spring Mountain counts several large home-building companies, including J.M. Peters Co. and Lewis Homes, among its clients, Sanderson added, and some of those builders are expanding their activities in Northern California.
“We can close and settle quickly, so they can get their construction loans paid back,” Sanderson said. “A lot of builders have urged us to open up in the north.”
About one-third of the 25,000 closings Spring Mountain handles annually are for developers, she said. About 90% of the company’s business is in residential real estate, but Sanderson said she hoped to increase the commercial escrow business to help even out the cycles in residential real estate.
Spring Mountain Escrow, which employs about 250 people, is the main subsidiary of Spring Mountain Group, a privately held company 80%-owned by financier Frank E. O’Bryan. Spring Mountain Group earlier this year purchased Pioneer Savings, a single-branch savings and loan in Newport Beach.