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Guild acquires small retail lender Legacy Mortgage

Move boosts Guild's presence across the Southwest

Acquisitive lender Guild Mortgage on Tuesday announced the acquisition of Legacy Mortgage, increasing its footprint in the Southwest.

Publicly traded Guild is picking up Legacy’s 13 branches across four Southwest states – Arizona, Colorado, New Mexico and Texas.

Terms of the deal were not disclosed.

“This acquisition is part of the company’s continued plan to grow both in existing markets and by entering new ones with selective acquisitions of like-minded lenders,” Guild CEO Mary Ann McGarry said in a statement. “Legacy Mortgage recently celebrated its 20-year anniversary of providing home financing and our team has always admired the company’s commitment to its employees and customers… Our combined strengths will drive further growth throughout the Southwest.”

Legacy, headquartered in Albuquerque, New Mexico, was founded in 2002 and purchased by its CEO Jack Thompson in 2006.

The lender originated approximately $309 million in mortgages in 2022, according to data from mortgage technology platform Modex. The company has 39 active loan officers across its retail branches, according to Modex data.

By joining Guild, Legacy loan officers can offer additional mortgage products and specialized loan programs.

“Clients will also benefit from access to new digital and customer relationship tools that improve every step in the lending experience, including servicing, a Guild strength for decades,” Thompson said in prepared remarks.

The acquisition is Guild’s second pickup in the last three months. Guild acquired Inlanta Mortgage, expanding its presence in the Midwest. Terms of that deal were also not disclosed.

Per Inside Mortgage Finance data, Guild was the 26th largest mortgage originator in America in 2022, producing $19 billion in volume. The distributed retailer’s volume slipped to $2.7 billion in the fourth quarter of 2022 from $4.4 billion in the third quarter, IMF data shows.

In a note to clients Tuesday evening, mortgage analysts at Keefe, Bruyette & Woods said they’ve seen a modest pickup in mergers & acquisitions activity in recent months.

“The operating environment for mortgage originators remains very challenging. In some cases, we think that this creates an opportunity to acquire good businesses at attractive valuations while also removing some excess capacity from the system. As the origination market has rapidly shifted to purchase and profitability has fallen sharply, we think more lenders could look to acquire mid-sized distributed retail business. This should enable companies to be more successful in the purchase market.”

The KBW analysts noted that while the origination businesses of “some public (and stressed) players are likely not worth much, if anything, the servicing assets and in some cases technology have value. Given that, we think larger M&A is possible (likely at discounts to book) if acquirers receive MSRs or proprietary technology.”

The most likely acquirers, per the analysts? Rithm Capital, Rocket Mortgage and Mr. Cooper.

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