IPO / M&AMortgageOrigination

NAF in talks to acquire Draper & Kramer Mortgage Corp.: sources 

DKMC originated about $2 billion in mortgages in 2023

Top-35 mortgage lender New American Funding (NAF) is in negotiations to acquire Chicago-based retail shop Draper & Kramer Mortgage Corp. (DKMC), multiple sources told HousingWire.

The sources said negotiations are in the late stages and remaining details are expected to be finalized this month. As part of the deal, NAF would acquire the residential mortgage arm of Draper & Kramer, a property and financial services group established in 1893 by Arthur W. Draper and Adolph F. Kramer.  

The board at DKMC, which has separate businesses in the property management and commercial finance spaces, among others, wants to exit the residential mortgage business, the sources told HousingWire.

A lengthy call between NAF executives and DKMC sales staff took place on Thursday. 

According to one sales professional at DKMC, rumors about the board pushing to sell the mortgage company started to spread earlier this winter. Despite making money in prior years, the company had furloughs and cutbacks in the beginning of 2023, an employee said. 

“Sentiment was that the business model wasn’t working in these times. The board didn’t have an interest in keeping a residential mortgage division,” the employee told HousingWire.

This source said there was no company-wide announcement regarding an M&A deal. Some salespeople, however, had the opportunity to talk to NAF executives, who asked them to decide if they want to transition to the new company and to “clear” their pipelines. They did not provide details on bonuses or other compensation.

Non-sales staff, including processors and underwriters, are expected to be given the opportunity to join NAF, sources said. 

Representatives at Draper and Kramer did not respond to requests for comments. A spokesperson for NAF said the company would not comment at this time. 

If the deal goes through, the companies would have about 2,130 loan officers, which includes 1,884 from NAF and 251 from DKMC, per data collected as of Jan. 22 from the National Multistate Licensing System.

In terms of volumes, California-based NAF, founded in 2003 by Patty and Rick Arvielo, originated $7.4 billion from January 2023 to September 2023, according to Inside Mortgage Finance estimates.

Mortgage tech platform Modex shows $8.2 billion originated in mortgage loans for the whole year of 2023. HousingWire reported that the company was entering the joint ventures arena in April, offering multiple JV models in a margin-compressed and highly regulated industry. 

Meanwhile, DKMC originated about $2 billion in mortgages in 2023, according to the Modex data. The data shows that conventional loans comprised about 67%, and about 84% were purchase loans. The IMF data does not list the company among its top 100 mortgage lenders for the nine months of 2023.

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