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LOS Leaders Are Emerging

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TME-TGarritanoI always used to wonder how the mortgage space could support 50, 60 different loan origination system (LOS) providers. I guess when you operate in a loosely regulated space with lots of investors, lots of volume and lots of mortgage bankers and brokers, there’s enough to go around for all of these LOS companies to survive. Today all of those conditions have disappeared so we’re seeing a lot of shifts in the LOS space.

So, who are the leaders in the midtier LOS space? A slew of recent acquisitions has brought three LOS companies to the front of the line in my view. The LOS in first place has to be Ellie Mae. In a move to bolster its content and services offering, Ellie Mae signed a definitive agreement to acquire AllRegs, an information provider for the mortgage industry.

AllRegs information management solutions are used by more than 3,000 companies representing every facet of mortgage banking: major lenders and investors, regulators, Federal and State agencies, brokers, mortgage services vendors and law firms. AllRegs product offerings include education and training, loan product and guideline data and analytics, and the AllRegs online reference library that includes investor underwriting and insuring guidelines, federal and state statutes and regulations, Mortgage Mentor “how to” guides and plain language interpretation and analysis.

“AllRegs has built a strong reputation as the industry’s source for investor guidelines, compliance resources and education,” said Sig Anderman, chief executive officer of Ellie Mae. “With the acquisition of AllRegs, Ellie Mae will expand its customer base and add a broad array of content and services that complement our portfolio of product offerings. This strategic acquisition enhances Ellie Mae’s compliance leadership and furthers our goal to be the company that powers the entire mortgage industry.”

AllRegs extensive content library spans nearly every aspect of the mortgage industry. Relied upon by virtually all of the top 100 lenders in the country, AllRegs is the exclusive electronic publisher of underwriting and loan product guidelines for Fannie Mae, Freddie Mac, Wells Fargo Home Mortgage, Citigroup, JPMorgan Chase, the Federal Home Loan Bank of Chicago, U.S. Bank Home Mortgage and Flagstar Bank, N.A.

The transaction is expected to close within 90 days and is subject to customary closing conditions. Under the terms of the agreement, Ellie Mae will acquire AllRegs for $30.0 million in cash, subject to certain purchase price adjustments, including for working capital.

So, who can challenge Ellie Mae? The Altisource acquisition of Mortgage Builder puts them in strong contention. However, several times in the past we’ve seen good midtier technology companies that offer quality service and have a decent market share get acquired by larger companies. What happens next? The midtier company loses its identity and struggles in most cases. Is this what’s in store for Mortgage Builder now that they have been acquired by Altisource?

I don’t think so. The Altisource acquisition of Mortgage Builder has the beginnings of a great success story. For Altisource, they are getting more involved in the mortgage space. They want to have an end-to-end LOS. They want to control the entire mortgage lifecycle. That’s a good thing for Mortgage Builder because they will be the only LOS in the Altisource portfolio and Altisource doesn’t know much about the LOS, so Keven M. Smith, Chief Executive Officer of Mortgage Builder, will remain a big player. He’s not looking for an exit strategy.

“I built the company from the ground up,” he said. “Being privately held has been great, but some of the acquisitions that we want to do and the extensions to our product require that a bigger company be behind us. There are also offerings within Altisource like Lenders One, for example, that we look forward to being more involved with.

“This is not a cash-out deal, this is the next step in the lifecycle of Mortgage Builder,” Smith continued. “All of the staff are being brought over. As time goes on we are looking to expand. We will add more staff and look to get more entrenched in Altisource offerings. Altisource doesn’t have an LOS so the fact that we would be here long term running the company was a selling point for them.”

In fact, if you look the Equator acquisition, Altisource has a clear track record established. The Equator staff and corporate identity remains in tact. The company was acquired for its expertise in loss mitigation and its involvement with Altisource has enabled the Equator staff to grow their business.

“It’s harder to grow as a privately held LOS,” noted Smith. “We at Mortgage Builder are looking to be a larger company and grow. I don’t have a rich uncle to go to and get money from to do the acquisitions that we want to do. We want to be the premier LOS player.”

Mortgage Builder recently acquired a PPE/CRM provider and a servicing software provider. Now that the company has Altisource behind it more acquisitions will undoubtedly follow. Mortgage Builder will also be able to accelerate plans to improve its existing technology to prepare lenders for what comes next in the world of mortgage lending. All indications are that the acquisition was a good fit for a larger company looking to offer a complete lending technology solution and a solid midtier LOS looking to grow.

Lastly, PCLender, LLC has acquired the PCLender loan origination system back from Black Knight Financial Services and formed a new company that will focus on providing turnkey mortgage technology solutions for midsized mortgage bankers. No sale price was disclosed.

PCLender, LLC has been heavily capitalized to expand the system functionality and implement automation solutions for lenders requiring increased compliance and workflow efficiencies. The system currently supports banks and credit unions with consumer point-of-sale, loan processing, automated underwriting, loan closing, integrated imaging, secondary marketing, trade management, warehouse management and interim servicing. PCLender’s retail and wholesale platform will now be expanded to support correspondent lending and include automated loan audit and post-closing review support. Additionally, an emphasis will be made to refine vendor integrations and build out fulfillment services that streamline lender operations.

Lionel Urban, president and CEO of PCLender, LLC said the management team will initially focus on strengthening customer relationships and pursue customer collaboration to speed the pace of design enhancements. “I believe the PCLender customer base has some very valuable feedback and we intend to implement that into our development road map. I think that was a strength of the organization early on and we are excited to reengage with the customer base in a collaborative manner.”

PCLender, LLC will continue to build on the scalable architecture and security that is currently inherent in the system. PCLender, LLC anticipates the development and support resources dedicated to the LOS will increase by over 60 percent in the next 12 months to support the new growth initiatives.

PCLender, LLC will focus on workflow and configuration defaults that will enable lenders to implement the LOS within 30 days using industry best practices. Mr. Urban believes that the small to midsized mortgage lenders are an underserved market and plans to offer a more robust solution that will require less administrative support by the lenders.

All three of these companies have emerged as LOS leaders that will be around for the long haul.

About The Author

[author_bio]

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

What’s Next For Mortgage Builder?

Several times in the past we’ve seen good midtier technology companies that offer quality service and have a decent market share get acquired by larger companies. What happens next? The midtier company loses its identity and struggles in most cases. Is this what’s in store for Mortgage Builder now that they have been acquired by Altisource?

I don’t think so. The Altisource acquisition of Mortgage Builder has the beginnings of a great success story. For Altisource, they are getting more involved in the mortgage space. They want to have an end-to-end LOS. They want to control the entire mortgage lifecycle. That’s a good thing for Mortgage Builder because they will be the only LOS in the Altisource portfolio and Altisource doesn’t know much about the LOS, so Keven M. Smith, Chief Executive Officer of Mortgage Builder, will remain a big player. He’s not looking for an exit strategy.

“I built the company from the ground up,” he said. “Being privately held has been great, but some of the acquisitions that we want to do and the extensions to our product require that a bigger company be behind us. There are also offerings within Altisource like Lenders One, for example, that we look forward to being more involved with.

“This is not a cash-out deal, this is the next step in the lifecycle of Mortgage Builder,” Smith continued. “All of the staff are being brought over. As time goes on we are looking to expand. We will add more staff and look to get more entrenched in Altisource offerings. Altisource doesn’t have an LOS so the fact that we would be here long term running the company was a selling point for them.”

In fact, if you look the Equator acquisition, Altisource has a clear track record established. The Equator staff and corporate identity remains in tact. The company was acquired for its expertise in loss mitigation and its involvement with Altisource has enabled the Equator staff to grow their business.

“It’s harder to grow as a privately held LOS,” noted Smith. “We at Mortgage Builder are looking to be a larger company and grow. I don’t have a rich uncle to go to and get money from to do the acquisitions that we want to do. We want to be the premier LOS player.”

Mortgage Builder recently acquired a PPE/CRM provider and a servicing software provider. Now that the company has Altisource behind it more acquisitions will undoubtedly follow. Mortgage Builder will also be able to accelerate plans to improve its existing technology to prepare lenders for what comes next in the world of mortgage lending. All indications are that the acquisition was a good fit for a larger company looking to offer a complete lending technology solution and a solid midtier LOS looking to grow.

When asked where he sees Mortgage Builder in the next five years, Mr. Smith replied, “We want to be in first place by a mile and a half. We want a more robust end-to-end solution with increased market share. We want to grow.”

About The Author

[author_bio]

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

LOS Acquisition Goes From Rumors To Fact

Rumors have circulated back since before the MBA Technology Show that LOS Mortgage Builder has been for sale. I heard those rumors personally, but have held back reporting until they become fact. As we all know, acquisitions can fall apart. Today I can report that Altisource has announced its intent to buy Mortgage Builder. Here’s why:

With this deal Altisource will further diversify its customer base by providing software solutions to leading mortgage banks, credit unions and financial institutions in the United States. Altisource recently also acquired Equator. The acquisition is expected to close within 30 days and is subject to customary closing conditions. No sale price was disclosed.

William B. Shepro, Chief Executive Officer of Altisource said in a prepared statement, “The addition of Mortgage Builder’s loan origination, servicing and electronic document management software enhances Altisource’s current portfolio which provides customers with one of the most comprehensive real estate and mortgage lifecycle management platforms and services marketplaces available. Mortgage Builder will join the Altisource family of businesses and operate within our Technology Services segment. Together, we will continue to develop innovative technology solutions that meet the evolving needs of the real estate and mortgage marketplaces.”

Keven M. Smith, Chief Executive Officer of Mortgage Builder said in a prepared statement, “Mortgage Builder and Altisource share a commitment to delivering a modern technology platform that enhances compliance while improving loan processing efficiency in both the retail and wholesale production channels.  Joining Altisource will enable us to combine forces toward the common vision of developing the industry’s most advanced and effective real estate and mortgage lifecycle management platform and marketplace. Going forward, our customers and partners will continue to experience the same dedication to innovation and customer support that they have come to expect from Mortgage Builder, enhanced by Altisource’s financial strength, stability and global resources.”

About The Author

[author_bio]

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

A New Take On Moving Lending Online

*A New Take On Moving Lending Online*
**New Product Hits The Market**

***Here’s a new twist on online transparency: Altisource launched Hubzu, an online residential real estate marketplace. Hubzu improves the online home buying and selling experience by making it easier, more efficient and transparent from start to finish. Hubzu puts the entire experience online – from searching and bidding to financing and closing. Effective today, Hubzu replaces GoHoming, Altisource’s current online marketplace for real estate.

****Hubzu is live at Hubzu.com and includes all real estate inventory that was previously on GoHoming.com, along with an enhanced user experience and expanded functionality. The launch capitalizes on Altisource’s position as a global leader in high-value, technology-enabled residential real estate solutions.

****“We’ve had a lot of success with GoHoming, facilitating nearly 60,000 home sales to date,” commented Scott Wielar, General Manager of Hubzu. “However, to stay at the forefront of the market, our brand experience and scope of services needed to evolve. We listened to our customers and redesigned the user experience to make the entire real estate transaction process easier for home buyers and sellers. With the new features and functionality, we are further extending our efficiency and transparency in facilitating the home buying and selling process,” continued Wielar.

****Buyers can search for homes, bid to buy homes via auction or the traditional offer process, or use the “Own It Now” feature to edge out competing bidders and win an auction immediately. The website then guides buyers through the contracting and financing process in one centralized online location. For sellers, Hubzu offers faster, easier sales through increased marketing visibility and the ability to track bids and respond to offers online. In 2012 and early 2013, Hubzu plans to roll out functionality enhancements, new features and additional inventory for sale.