Loan origination system vendor Mortgage Builder announced that it will acquire GCC Servicing Systems, the mortgage servicing technology vendor that it was spun off from in 1998.
The deal is scheduled to close on June 1, Mortgage Builder President and CEO Keven Smith told Mortgage Technology by phone Tuesday in his first interview about the acquisition. He declined to disclose the purchase price.
The two companies share a history that dates back to 1977, when Glenn Liebowitz founded Glenn Computer Corp. as a mortgage servicing services bureau. Liebowitz, the sole owner of Glenn Computer Corp., has held a minority stake in Mortgage Builder since the spin-off, which made it “a lot easier to work things out financially,” Smith said.
“It was a matter of buying [Liebowitz] out and bringing him in and giving him a way of eventually retiring,” Smith said. “Customers always wondered when he was going to retire. He’s been doing this for 40 years and this gives him a nice transition path for him in the long-term, as well as for our clients.”
With the agreement announced Tuesday, GCC’s staff will now work for Mortgage Builder in a separately run division lead by GCC Vice President Jeff Augenstein. Liebowitz will remain actively involved in the company for a period of at least six months to a year.
While it made sense in the 90s to split the companies apart and for Mortgage Builder to go out on its own, Smith said the ongoing evolution of the industry made the timing right to bring the companies back together.
“The way the servicing segment is starting to take hold with servicing-released premiums changing and more people looking at servicing, it made logical sense to tie them back together so we can have strength in numbers to go after either or both of those products,” he said.
After Mortgage Builder was spun off as a standalone LOS vendor in 1998, the two companies continued to share Glenn Computer Corp.’s three-story building in Southfield, Mich. Glenn Computer Corp. focused its efforts on servicing technology and in a corporate rebranding, created GCC Servicing Systems as a wholly owned unit of Glenn Computer Corp. in 2003.
Once the deal is closed, Mortgage Builder Software Inc. will assume the rights to GCC Servicing Systems. Glenn Computer Corp. will continue to exist as a corporate entity, but for minor business matters unrelated to the mortgage industry.
The two companies have focused their technologies on small and midsize mortgage lenders and servicers, including community banks and credit unions. The combined company will now have offerings across the entire lender/servicer spectrum—from Mortgage Builder’s software as a service-based product and pricing engine, doc prep, and LOS through to GCC’s loan servicing application, a browser-based SaaS platform that automates all areas of servicing, including loan set-up, cash management, escrow and insurance administration, investor accounting and reporting, and default management.
Smith emphasized that while customers of each product will benefit from deeper integrations between the two systems, Mortgage Builder will continue to integrate with other servicing platforms and GCC’s G/Serv platform will integrate with other LOS providers.
“We have integration right now, but the integration will get more seamless between the two and more effort will be put into it,” Smith said. “GCC would be our preference for people to go with that product, but we’re interfacing with any other servicing bureau as well.”
The office building was not included in the deal, but Smith said Mortgage Builder will take over the GCC space on the third floor to optimize its existing use of the building’s second and first-floor space.
Some redundant positions will be eliminated in accounting, reception and human resources and the two companies’ data hosting and disaster recovery infrastructures will be consolidated. Still, Smith said the company won’t be laying off any of its staff. The acquisition will grow Mortgage Builder’s staff of 50 by about 25%.
“Everybody’s being retained,” he said. “We’re looking for growth, growth from origination and growth from servicing.”
