Financial Freedom Buys Transamerica Unit

Financial Freedom Senior Funding Corp., a reverse mortgage lender based in Irvine, said it bought Transamerica HomeFirst Inc. for $200 million in cash to expand its U.S. portfolio. Freedom Financial, a unit of MRCo Inc., will acquire 6,000 reverse mortgage loans and the San Francisco-based company’s mortgage servicing operation, stretching its presence into 35 states. Reverse mortgages hold no regular payment obligation and are made to elderly homeowners who might not repay the loan until they die or sell the home. Financial Freedom will work with Lehman Bros. Holdings Inc., which financed the acquisition, to repackage the Transamerica loans as securities. Joseph Hu, director of structured finance ratings at Standard & Poor’s Corp., which will rate the issue, said he believes this will be the first securitization of reverse mortgage loans rated by a U.S. credit rating agency. Transamerica HomeFirst is a unit of Transamerica Corp., the financial services giant that is being acquired by Aegon of the Netherlands for $10.8 billion.