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IPO / M&AMortgage

CrossCountry strikes a deal to acquire LendUS

It's the first significant M&A play by a mortgage lender in 2022

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Ohio-based CrossCountry Mortgage has entered into an agreement to acquire California-based retail lender LendUS, multiple sources familiar with the deal told HousingWire. 

Founded in 2003 by mortgage broker Ron Leonhardt, CrossCountry originated $52 billion in mortgages in 2021, up 22% year-over-year, checking in as the 17th biggest lender in the country, according to Inside Mortgage Finance

LendUS doesn’t have quite the same heft. Founded after the combination of American Eagle Mortgage, Mortgage Financial, Regency Mortgage and RPM Mortgage, the company’s originations reached $7 billion in 2021, down 1% year-over-year. It has about 350 loan officers and roughly 100 retail branches. 

LendUS and CrossCountry did not respond to multiple requests for comment. 

Multiple sources told HousingWire that LendUS employees were informed of the deal in a conference call and had until about Friday to sign employment agreements with CrossCountry. 

As part of the acquisition, LendUS CEO Rob Hirst will remain in a managerial role, with LendUS functioning as CrossCountry’s largest division. 

“It was time for him to cash in his chips while he still has something of value,” said one source with knowledge of negotiations. 

The CrossCountry-LendUS deal appears to be the first in what analysts and industry veterans believe will be a wave of mergers and acquisitions in 2022. 

Across the industry, originations are down 50% year-over-year due to the decline in refinancings, but staffing capacity remains high after the glut of business in 2020 and 2021.  

Competition will be intense over the next 12 to 24 months, driving gain-on-sale margins down even further, Moody’s analysts wrote in March.

“Some of the smaller guys will have to be either laying off employees, or it’s gonna be tougher to survive and they will get taken out,” Kevin Heal, an analyst at Argus Research, told HousingWire. 

That’s an opportunity for bigger lenders to grow not only organically, but also via merger and acquisitions.

CrossCountry has been acquisitive over the last couple of years. Usually, the target company operates under CrossCountry’s umbrella after the acquisition. 

In 2020, the company acquired First Choice Loan Services, a New Jersey-based mortgage company with offices in 15 states. Financial terms of the deal were not disclosed. First Choice brought to CrossCountry retailer Costco’s mortgage program, which connects the big box retail giant’s members with a select list of lenders and offers a discount on the lending fees.

In 2019, CrossCountry acquired bemortgage, founded in 2017 as a division of Bridgeview Bank Group, and PERL Mortgage, a lender founded in 1994 that had 60 branches spread across 18 states, according to the Nationwide Multistate Licensing System & Registry.  

CrossCountry, which has seen considerable growth since 2013, operates in 50 states. It has been a Freddie Mac, Fannie Mae and Ginnie Mae approved seller and servicer since 2012. It provides purchases, refinances, and home equity products. 

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