Realogy Holdings Corp, a full-service residential real estate services company, and Guaranteed Rate, an independent retail mortgage company, announced on Wednesday a new joint venture, Guaranteed Rate Affinity, which is expected to begin doing business in June 2017.
Under the agreement, Guaranteed Rate Affinity will originate and market its mortgage lending services to Realogy's real estate brokerage and relocation subsidiaries, respectively NRT and Cartus, as well as to other real estate brokerage and relocation companies across the country.
As Guaranteed Rate moves in to work with Realogy, PHH announced it is exiting its existing joint venture with Realogy, as the company continues to shift its business focus.
With PHH pulling out, Guaranteed Rate Affinity will acquire certain assets of its mortgage operations, including four regional mortgage origination and processing centers, its relocation division and employees across the United States.“
We are pleased to have reached an agreement with Guaranteed Rate Affinity for the sale of the assets of our PHH Home Loans joint venture. The decision to sell our existing Joint Venture is a result of our review of strategic alternatives,” said Glen Messina, president and CEO of PHH Corporation.
“We believe this outcome represents the best opportunity to maximize the value of this platform and, when combined with the previously announced sale of MSRs, enables us to realize a substantial portion of our balance sheet value,” Messina continued.
Toward the end of last year, PHH announced that it planned to sell off its Ginnie Mae mortgage servicing rights portfolio. Then shortly thereafter, the company also announced it planned to sell its entire remaining mortgage servicing rights portfolio in a massive deal with New Residential Investment.
And PHH’s serving business wasn’t the only area to announce drastic change last year.
PHH said following the completion of the transaction and subsequent monetization of the net investment in PHH Home Loans, it expects to realize cash proceeds of $92 million before estimated transaction and other costs.
But as PHH reorganizes its business, Realogy and Guaranteed Rate are excited to move ahead with their new joint venture.
"This is a unique opportunity for us to accelerate our growth on a national level by bringing our cutting edge technology together with Realogy, a Fortune 500 company," said Guaranteed Rate CEO and Founder Victor Ciardelli.
"As we evaluated potential new options for our mortgage origination venture, Guaranteed Rate was clearly the right strategic partner to help our company-owned brokerage business and its affiliated sales associates offer an innovative and streamlined mortgage process built on best-in-class technology," said Richard A. Smith, Realogy's chairman, CEO and president.
Guaranteed Rate will own a controlling 50.1% stake of Guaranteed Rate Affinity and Realogy will own 49.9%.
The closing of the transaction is subject to Guaranteed Rate Affinity meeting certain state mortgage licensing requirements, PHH stockholder approval and other closing requirements.
The transaction is expected to include a series of interim asset sale closings with the initial closing targeted to occur in June 2017 and the final closing expected to occur during the fourth quarter 2017.