New American Funding has signed a letter of intent to buy the single-family mortgage financing operations and staff from Chicago-based property and financial services firm Draper and Kramer, according to the acquiring company.
Financial terms of the transaction were not disclosed.
The acquisition is the second in New American Funding's history, the last being
"Our hope is that we find other opportunities like that because we're not in a lot of the United States. So it might be a potential real strategy for our growth," he said. "But if we were to look at other opportunities, there would have to be a true synergistic or geographic value."
When asked whether the acquisition will change New American Funding's size ranking, Arvielo said it remains to be seen and the aim of the transaction is less about increased production but rather geographic reach. Market Mobility Intelligence data shows New American is the 12th largest among similar independent, retail nonbanks in the home mortgage industry, Arvielo said.
"We have this patchwork of geographies we have an opportunity to fill now," he added, noting that Draper and Kramer's single-family assets will help the Southwest-based New American Funding establish more operations on the East Coast and other regions.
NAF is transitioning for loans in the acquired company's loan pipeline and staff, with plans to expand originations through the addition of loan officers and underwriters and processors supporting them. It will review corporate positions and other operations selectively.
"We look at everything through the lens of what's in the best interests of the consumer and our practitioner that's hunting for the business. We look at what makes the most sense for them and what makes the most sense economically," said Arvielo. "I think we have the best of the best but as you grow, there are holes that present themselves and need to be filled. So we're excited about the opportunity of potentially filling some of them."
In response to a question about M&A conditions broadly and
"When I look at the landscape, I would say that it's more of a buyer's market today when it comes to mortgage origination," he said.
Arvielo stressed that New American Funding plans to be very cautious about making any further investments in acquisitions.
"I'd like to be much more active with the strategic approach and the geographic approach, but I'm going to be very conservative as it relates to making sure New American doesn't put itself under any undue pressure as a result of swinging for a fence or biting off more than it can chew," he said. "We're perfectly fine with organic growth. It's been better than it's ever been in 20 years right now, but I do like the idea of strategic acquisition."
