Digital lending software provider Blend announced on Monday that it is expanding its cloud-based platform with the acquisition of Title365 from the Mr. Cooper Group for approximately $422 million, reflecting an enterprise value of $500 million.
Subject to closing conditions, Blend anticipates to finish the deal by the end of the second quarter in 2021, leaving nearly 10% ownership interest to Mr. Cooper upon deal completion. Mr. Cooper expects to book an after-tax gain of $350 million on the transaction, according to the company’s 8K statement.
The title insurance and settlement services provider was originally bought by Solutionstar Holdings, an indirect wholly-owned subsidiary of Nationstar Mortgage Holdings (Mr. Cooper’s original name prior to rebranding) in 2015. At the time, that transaction closed for just $36 million in cash.
“This decision follows a comprehensive strategic review in which we determined that Title365 would gain greater investor credit as part of a company like Blend, where it will have a significant strategic impact,” said Jay Bray, CEO of Mr. Cooper Group. “This decision allows Mr. Cooper Group to focus on the growth and profitability potential within our core business of servicing and originations.”
Blend President Tim Mayopoulos, who is a former CEO of Fannie Mae, noted that Title365 has an intense focus on its customers and operational efficiency. It makes the title firm a good match as Blend looks to scale its operations.
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“Bringing together Blend’s technology and engineering talent with Title365’s deep industry and operational expertise will help us to minimize costs and inefficiencies by deeply integrating title and settlement into the loan process,” Mayopoulos said.
The Title365 team, which President Kristen Estrella will continue to lead across its U.S. and India offices, will join Blend once the acquisition closes.
“Traditionally, purchasing a home has been riddled with various complexities, requiring many steps and third-party participants. We’re thrilled to be joining forces with Blend,” said Estrella. “Together we have the power to simplify the process for real estate agents, lenders and servicers, insurers, and others, by leveraging our industry expertise to offer a seamless experience for consumers.”
The economic situation around the COVID-19 pandemic has placed pressure on lenders to offer remote solutions while keeping up with record loan volumes, and to that end, Blend has made several strategic moves to combine its efforts into what Mayopoulos calls “an end-to-end” experience.
In a 2020 interview with HousingWire, Mayopoulos said the company is interested in delivering closings in whatever format is deemed necessary – whether that be digital, hybrid or in-person. But Mayopoulos stands by his statement that virtually “every aspect of mortgage lending can be improved through digitization.”
Over time, Blend, which was named as one of HousingWire’s 2021 Tech 100 winners, has steadily grown to be a powerhouse in the mortgage tech industry. Blend’s white label technology is what powers mortgage applications on the site of banks such as Wells Fargo and U.S. Bank and integrated with CoreLogic in 2019 for an easier access line to borrowers credit.
In August, Blend finally achieved unicorn status after it raised a $75 million Series F round at a valuation of nearly $1.7 billion led by fintech-focused Canapi Ventures and backed by Temasek, General Atlantic, 8VC, Greylock, and Emergence.