It's Official: Altisource Is Buying Mortgage Builder
UPDATE: This story has been updated from a previous version to include a comment from Altisource Labs Managing Director Michael Schreck.
Altisource Portfolio Solutions' acquisition of Mortgage Builder Software will close next month, the companies announced Monday, following weeks of rumors but no official confirmation of the deal.
The transaction is expected to close within 30 days and is subject to customary closing conditions. Financial terms between Luxembourg-based Altisource and Mortgage Builder were not disclosed.
Mortgage Builder, based in Southfield, Mich., develops origination and servicing technology, and has about 65 employees and roughly 125 to 150 lender clients, typically small to midsize mortgage bankers and financial institutions. After the acquisition, it will operate within Altisource's Technology Services segment, currently headed by Mark Hynes.
Mortgage Builder representatives did not immediately respond to a request for comment. But when National Mortgage News reported in June that a deal was in the works, Mortgage Builder CEO Keven Smith said he was open to outside investment to help his company grow.
Altisource is a provider of technology, outsourcing and fulfillment services to the mortgage and real estate industries and was spun off from nonbank mortgage servicer Ocwen Financial Corp. in August 2009. Ocwen remains Altisource's largest customer, though the company has expanded from its core focus of default servicing and REO asset management into mortgage originations.
The strategy behind acquiring Mortgage Builder may be to provide Altisource with a venue to sell more of its origination services, some have speculated. But the company isn't overlooking the opportunity to sell Mortgage Builder's technology, says Michael Schreck, the managing director of Altisource Labs, a venture capital unit launched in May to invest and incubate enterprise software, analytics and other corporate technology.
"We believe in both [selling technology and services]," Schreck said in a Monday interview with NMN. "If you have the best software in the world, that's a product you can certainly sell, and naturally, if you cover the end-to-end lifecycle of a loan, it can also be an opportunity to provide services throughout that lifecycle."
There is some overlap between the new Altisource Labs unit and its previously existing technology division, but Schreck declined to comment on how Mortgage Builder will fit into the two groups.
Altisource's technology division includes a suite of software and tools for vendor management, default servicing, electronic invoicing, and commercial and residential loan servicing systems of record. Mortgage Builder's Colonnade software is a servicing system of record and it's unclear what Altisource's plans are for the overlapping platforms.
The Colonnade technology was formerly known as G/Serv when it was owned by GCC Servicing Systems. Mortgage Builder acquired GCC Servicing Systems in June 2012, and before that, the two companies shared a history dating back to 1977, when Glenn Liebowitz founded Glenn Computer Corp. as a mortgage servicing services bureau. Mortgage Builder was spun off as its own company in 1998 and GCC Servicing Systems was created as a unit of Glenn Computer Corp. in 2003. During the time the two companies were separate, both were headquartered in Glenn Computer Corp.'s three-story building in Southfield.
In addition to its core outsourcing and technology business, Altisource owns the Lenders One Mortgage Cooperative, which it acquired in February 2010. Mortgage Builder has long been the only LOS vendor with a preferred vendor relationship with Lenders One.