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Fathom acquires Elite to boost Texas footprint

Industry efforts to recover from the refi boom are fueling M&A activity

Encompass Lending Group, a subsidiary of real-estate services platform Fathom Holdings, has acquired Austin, Texas-based Elite Financing Group, the company announced Thursday. Terms of the deal were not disclosed.

Elite Financing Group will operate under the umbrella of Cary, North Carolina-based Encompass, which has a presence in the Dallas-Fort Worth area.

“With Elite Financing Group’s current book of business and their local relationships, we have the potential of nearly doubling our mortgage closings,” across the country over the next year,” Joshua Harley, CEO of Fathom said in a statement. Elite brings local market expertise which should help strengthen Fathom’s mortgage business in Texas, he added.

Elite Financing Group has two branch locations in Austin and The Colony with 28 sponsored mortgage loan originators (MLOs), according to the Nationwide Multistate Licensing System (NMLS).

Founded in 2005, Elite posted $164 million in production volume across 465 loans over the past year, according to mortgage data platform Modex.

Encompass Lending Group, with 11 active branches in seven states and Washington, D.C., has 58 sponsored MLOs, per NMLS data The lender is registered in 47 states and originated $148.5 million production volume across 495 loans in the past year, according to Modex.

The mortgage industry’s effort to rightsize from the refi boom is fueling merger and acquisition activity in the field.

For example, retail lender Guild Mortgage this week acquired First Centennial Mortgage, a privately-held Illinois-based lender with 15 branches. 

In addition, Texas-based Mr. Cooper Group acquired Home Point Capital Inc. earlier this month, a transaction that included the assumption of $500 million in bonds.

Following the expiration of a final tender offer, Mr. Cooper closed its acquisition of Home Point through a vehicle called Heisman Merger Sub.

Independent mortgage banks (IMB) reported an average net loss of $534 on each loan originated in Q2, an improvement from a net loss of $1,972 per loan in Q1, according to the Mortgage Bankers Association (MBA). 

The figure is still lower than the average net loss of $82 per loan in Q2 2022, and 58% of companies had a profitable second quarter this year.

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