Mortgage technology developer Ellie Mae purchased the intellectual property, technology and other assets of Mortgage Pricing Systems, developer of the Loan Eligibility and Pricing, or LEAP, mortgage product and pricing engine.
It’s the third acquisition since fall 2008 of a vendor with technology complementary to Pleasanton, Calif.-based Ellie Mae’s core technology, the Encompass360 loan origination system. The PPE has been rebranded Encompass Product and Pricing Service and will be integrated into the LOS.
“As we continue to expand our footprint in the mortgage space, customers have a greater dependency on product and pricing capabilities,” Jonathan Corr, Ellie Mae’s chief strategy officer, told Mortgage Technology. “In line with the strategy that we’ve laid over the last couple of years in terms of providing a compressive footprint from customer acquisition all the way to asset delivery, we focus on helping them with the investors’ expectations of quality and the regulatory changes that are coming down.”
All MPS employees and executives will join Ellie Mae in the transition. Corr declined to disclose the purchase price of the acquisition or the number of employees joining the company, but said the MCS base of operations will remain in New Jersey, as the new ownership plans to expand its East Coast presence.
Ellie Mae intends to maintain its partnerships with other PPE providers that integrate into Encompass360 through the Ellie Mae Network.
“Our position is we want to maintain giving our customers choice to use whatever partners they want to use,” Corr said. “But at the same time, we think there’s an opportunity to provide a richer and deeper experience by owning one of the providers.”
What is yet to be seen is whether the LEAP integration to the Calyx Software Point LOS will remain.
“That will be a function of Calyx Point,” Corr said. “It’s totally their decision. I have every intention of operating with all customers, but my hands are tied when it comes to certain vendors and it depends on their decision.”
PPE technology has grown in prominence over the past year, as Internet giant Google has entered the space with an online rate search. MPS is not one of the four PPE vendors working with Google on the Comparison Ads tool, but Corr would like that to change.
“Google’s stated strategy is they want to basically work with any product that is used by the lenders that do business with them,” Corr said. “I know that many Encompass360 customers do that. I wouldn’t be surprised if we could do something with them in the future.”
Corr said MPS has about 35 customers, the “vast majority” of which are Encompass360 users. The two technologies are both built on the same .NET, SQL server architecture, which will make the integration of the PPE into the LOS smoother. Corr added that MPS has built a reputation that LEAP is an easy to use technology that’s can be deployed easily at a lending operation. LEAP is already accessible through an integration similar to other PPE vendors, but Corr said now that Ellie Mae owns the LEAP technology, that integration will be enhanced.
“Our product and pricing integrations are pretty deep into Encompass360 but they’re not at the level that our customers want,” he said. “Once you make a product part of a product family, you can change user interface, credential, all kinds of things you can’t do, even with a strong partnership.”
In 2008, Ellie Mae purchased mortgage document preparation vendor Online Documents and followed that acquisition with
In both of those acquisitions, and now with the MPS deal, Corr said the impetus was to take an already developed technology and distribute it to a broader customer base of Encompass360 users.
At the same time, the company has to balance the potential upside of offering a new product without hurting its relationships with third-party vendors that pay fees to integrate with the LOS through the Ellie Mae Network, as the acquisitions make Ellie Mae a competitor to vendors it has to cooperate with, a strategy Corr called “co-opetition.”
“It’s a balancing act, but many companies do it in many industries when they have multiple partners and have their own solution,” Corr said. “It’s incumbent upon us to make the experience and value proposition in what we offer better than that of our partnerships.”
In December, LOS developer Calyx, one of Ellie Mae’s chief and fiercest competitors, also
