IPO / M&AMortgage

Guild breaks into Northeast with acquisition of RMS

Retail lender will acquire Residential Mortgage Services Holdings for roughly $200M

Publicly traded retail mortgage lender Guild Holdings is on the hunt for acquisitions, and it’s found a juicy target in Maine-headquartered retail lender Residential Mortgage Services Holdings.

The acquisition of RMS for $196.7 million (3.25x earnings) gives Guild a substantial foothold in the Northeast and a bevy of purchase business.

RMS, founded in 1991, has 70 offices across 14 New England and Mid-Atlantic states. In 2020, RMS originated $8.5 billion of mortgages, according to Inside Mortgage Finance. It’s averaged 70% purchase over the past decade, according to Guild, which itself originated $35.2 billion in 2020.

Based on 2020 loan originations, the combined company would have been the seventh largest nonbank retail lender in the country.

“We have a history of growing through targeted acquisitions, and the transaction with RMS supports our strategy to expand into the Northeast,” Mary Ann McGarry, CEO of Guild, said in a statement. “Our close cultural alignment and commitment to strong values across both organizations, combined with a retail and purchase market focus provide us with confidence that this acquisition will contribute to our ongoing success.”

Don’t sleep on non-QM products

Now is the perfect time for originators to consider expanding to non-QM products – not just to grow their business and diversity their product offerings, but also to ensure they are not missing out on an opportunity to better serve their customers.

Presented by: Acra Lending

The acquisition of RMS is Guild’s seventh since 2008. It has been actively trying to grow its footprint across the country in recent years, particularly in the Midwest.

Guild, which went public in the fall amid a record year, collected $160.6 million in net income in the first quarter of 2021. It originated $9.8 billion in the first quarter, down from the $10.6 billion it originated in the Q4 2020.

According to its earnings statement, released Tuesday, Guild managed to increase its gain-on-sale margin in the first quarter of 2021, an outlier in the mortgage industry. It managed a 457 basis point gain on sale margin, above the 436 bps margin in the fourth quarter. Roughly 37% of its originations in Q1 were purchase mortgages.

The RMS acquisition is one of roughly a half dozen in the mortgage originations space in the past six months. In fact, in just the past few weeks, Finance of America acquired Parkside Lending‘s wholesale business for $40 million, New York Community Bank pledged to acquire Flagstar, and Ocwen agreed to buy Texas Capital‘s correspondent business. In the biggest deal of all, NewRez agreed to pay $1.7 billion for Caliber Home Loans.

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