Baton Rouge mortgage company GMFS LLC is being acquired by New Jersey-based Zais Financial Corp. for $63 million in cash.

GMFS is privately owned and headed by President and Chief Executive Officer Terrell “Tee” Brown Jr. The company originates home loans, primarily in the southern United States. GMFS also holds the servicing rights to those loans.

“All of the management’s staying, all the employees. We’re looking to grow,” Brown said Wednesday.

Brown said there were limits on what he could discuss since Zais is publicly traded. But the deal positions GMFS for more growth and will be great for GMFS and Baton Rouge, he said.

GMFS has 220 employees and is licensed as a mortgage banker in 29 states. In 2013, GMFS originated about $1.4 billion in mortgage loans, generating net income of about $14.7 million. As of Dec. 31, GMFS held a portfolio of mortgage servicing rights of about $2.2 billion in principal balances.

GMFS started with a staff of 20 when it was founded in 1999 by former United Companies Financial Corp. chief executive J. Terrell Brown after that public company collapsed into bankruptcy. United’s business model had been based on selling bond issues backed by loans it made to high-risk borrowers, a market that soured.

Zais Financial is based in Red Bank, New Jersey. Zais is a real estate investment trust that originates, invests in, finances and manages home loan assets, other real estate-related securities and financial assets.

Kevin Morgan, president of the Louisiana Mortgage Lenders Association, said the industry has seen quite a bit of consolidation of late, especially among smaller firms.

Since 2010, when the Dodd-Frank legislation went into effect, smaller, independent mortgage lenders and brokers have felt more pressure to sell because of the burden of complying with those regulations, Morgan said.

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In 2010, the association had 216 members. The association now has 196 members.

Brian Andrews, assistant director of the LSU Real Estate Research Institute, said servicing home loans is a lucrative line of business.

Servicers receive an annual fee for 30 years to collect taxes and insurance and make sure they are paid, Andrews said.

Andrews said he hasn’t heard of a lot of consolidations in the industry. But big companies have gobbled up smaller companies in order to acquire the servicing income.

The bigger mortgage lenders are acquiring smaller competitors for the same reason that banks buy other banks, Andrews said. Each bank has its own portfolio of loans, officers, loan-review and accounting areas and so forth. Acquiring another bank increases the size of the portfolio while reducing overhead. Duplicate positions, such as president and chairman, are usually eliminated.

“With single-family mortgages, it’s a pretty standardized thing. You don’t have to look at rent rolls. You don’t need to look at leases and operating statements,” Andrews said. “It’s home mortgages. Those are pretty homogenized.”

Zais expects to complete the deal during the fourth quarter. The acquisition must be approved by regulators.

Follow Ted Griggs on Twitter, @tedgriggsbr.