American Financial Resources sells entire stake to investment group

National lender and construction-loan specialist American Financial Resources announced Monday it had agreed to the business' sale to an investment group led by a Denver-based fund manager.

The Parsippany, New Jersey-based mortgage company who offers wholesale, correspondent and consumer-direct channels, will sell 100% of the business to Proprietary Capital, whose institutional platform gives investors exposure to the residential mortgage market and related assets. 

"With the support and investment of Proprietary Capital, AFR will begin a new phase of rapid growth that will directly benefit our borrowers, wholesale and correspondent clients, and employees," said American Financial CEO Rich Dubnoff in a press release. 

Stratmor Group served as an advisor to AFR in the sale. Terms of the acquisition were not disclosed and are subject to state and regulatory approvals.

Originally founded in 1997 by current chief administrative officer Corey Dubnoff, AFR found a specialized niche within the mortgage industry by offering several different types of loan products supporting homebuilding, including single-close construction-to-permanent, renovation and manufactured home mortgages. The company also offers non-QM products, in addition to conventional and government-sponsored loans.

Also founded in 1997, Proprietary Capital has focused on delivering returns to investors primarily through various segments of the U.S. residential mortgage market. "With the acquisition of AFR, we will build on our already strong mortgage platform," said Craig Cohen, managing member of the alternative investment management firm. 

"With the addition of AFR's robust operational platform, loyal customer base, long-term dedicated employees, and their breadth of products and services, we will catapult our growth for many years to come," Cohen added.

AFR's deal adds another transaction to the growing list of mergers and acquisitions that have emerged in the past 12 months. While the majority of deals have ended up combining nonbank home lenders, the timeline of events also involves agreements between insurance companies, servicers, secondary market platforms and fintechs and other mortgage technology providers. 

Meanwhile, the home lending industry continues to follow developments of the proposed merger between technology giants Black Knight and ICE Mortgage Technology. This week the deal scored a win when the Federal Trade Commission dropped its case against the companies. They had previously agreed to offload Black Knight assets, including the Empower loan-origination system and product-pricing engine Optimal Blue.