Guaranteed Rate and Realogy Holdings Corp. have agreed to form a new joint venture.
The new entity, called Guaranteed Rate Affinity, will primarily originate and market its services to Realogy's real estate brokerage and relocation subsidiaries including NRT and Cartus. The company will also aim to lend to a broader consumer base, the companies said Wednesday.
The new entity will join a spate of endeavors aiming to bridge the gap between real estate and mortgage lending. Cornerstone Home Lending and homebuilder Oakwood Home announced plans
"This is a unique opportunity for us to accelerate our growth on a national level by bringing our cutting edge technology together with Realogy," Guaranteed Rate CEO and founder Victor Ciardelli said in a news release.
Guaranteed Rate will hold a 50.1% stake in the joint venture, while Realogy will have a 49.9% stake.
The new entity is expected to begin operations in June. That start date though is dependent on another deal: Guaranteed Rate Affinity has agreed to acquire certain assets of PHH Home Loans, effectively shutting down the joint venture between PHH Corp. and Realogy.
With its departure from PHH Home Loans and its
Among the assets Guaranteed Rate Affinity has agreed to buy from PHH Home Loans include its four regional mortgage origination and processing centers and its corporate relocation division. Guaranteed Rate Affinity also plans to take on a majority of PHH Home Loans' employees nationwide.
"We appreciate the hard work and commitment of the current joint venture employees during this transition period and we look forward to having them become part of the Guaranteed Rate Affinity team," Ciardelli said.
Both deals are contingent on Guaranteed Rate Affinity meeting certain state mortgage licensing requirements. The agreement for PHH Home Loans' assets must also receive approval from PHH's shareholders.
If given the green light, the transaction between PHH Home Loans and Guaranteed Rate Affinity is expected to occur in a series of closings, with the initial closing targeted for June and the final closing expected in the fourth quarter. PHH said it expects to receive $92 million in cash proceeds from the transaction before costs.
"The decision to sell our existing joint venture is a result of our review of strategic alternatives," PHH CEO and President Glen Messina said in a news release Wednesday. "We believe this outcome represents the best opportunity to maximize the value of this platform and, when combined with the previously announced sale of MSRs, enables us to realize a substantial portion of our balance sheet value."
PHH's relationship with Realogy goes back to when both were subsidiaries of Cendant Corp. Now, both are independent publicly traded companies.
Also on Wednesday, PHH reported that it recorded a net loss of $133 million in the fourth quarter of 2016 that included a $55 million pretax negative fair value adjustment to its mortgage servicing rights portfolio and $41 million in exit costs related to its private-label business. The earnings loss was equal to $2.49 per diluted share. The company had recorded a
Additionally, PHH filed a Worker Adjustment and Retraining Notification Act notice indicating it will be
