Mid America Mortgage on Monday announced that it has agreed to sell its main retail division to Legend Lending.
Financial terms of the deal were not disclosed. Mid America will selectively retain some retail for certain products and portfolio retention, and remain active in automation, secondary marketing executions for specialty products, correspondent and wholesale. The deal includes an earnout and Legend will continue to use Mid America’s loan origination system.
"We wanted to refocus on third-party originations and technology solutions," said Mid America President Jeff Bode. He plans to rebrand his company as Clickn' Close in late May, pending regulatory approval.
The deal is expected to close in early July pending the receipt of approvals from state licensing authorities, and expands the number of states Legend is active in from 11 to approximately 30.
"We were at a point where we could take on the growth from an operations and liquidity standpoint, and it was a good natural fit. It expedited the growth we were already seeing,” said Joel Redmond, president at Legend Lending, in an interview. “The continuity of the LOS also was a big part of it.”
Mid America will retain the right to license out its LOS as it refocuses more exclusively on its technology, third-party channels and secondary market services for specialty products like Section 184 and down payment assistance loans.
Mid America plans to continue to pursue innovations in securitization execution that will be available as an alternative when the kind of
Volatility recently made DPA loans uneconomic for lenders selling them in the spec pool market, so having an alternative execution ready could help ensure those loans get made when that kind of disruption occurs, said Troy Baars, president of Vice Capital Markets.
“The DPA portion of loans is funded with the premium on the security or the servicing, so they need to get a high-premium bond to do that business,” Baars said in an interview.
