CoreLogic dropping Dorado to concentrate on appraisal management
CoreLogic is exiting its loan origination software and default management operations over the next 24 months and instead accelerated plans to transform its appraisal management company unit.
Those two noncore businesses generated approximately $40 million in revenue in the first three quarters of the year, the company said in a press release.
The appraisal management business had $65 million in revenue over the same period. However, this change will result in lower revenue for CoreLogic during 2019.
"CoreLogic remains focused on capitalizing on our scale and market leadership and the opportunities presented by our must-have workflow solutions in the U.S. mortgage market," President and CEO Frank Martell said in a press release. "The actions we are announcing today should further position the company to achieve its 30% [adjusted EBITDA] margin target and enhanced organic growth rates in 2020."
CoreLogic's adjusted EBITDA was $128 million in the third quarter, down 7% from the year prior, driven by reduced U.S. mortgage loan unit volumes and lower appraisal revenue, among other things, the company's third-quarter earnings release said. The adjusted EBITDA margin for the quarter was 28%; for the same period in 2017 it was 29%.
When the LOS first came to market, many considered Dorado's cloud computing, automation and highly custom capabilities ahead of their time in the mortgage industry. But those cutting-edge features often required lengthy and costly implementations that were out of reach to all but the largest lenders, like JPMorgan Chase.
But the larger and more sophisticated institutions that could actually benefit from Dorado's advanced features were often wary of doing business with a small startup like Dorado. CoreLogic's outright acquisition of Dorado in 2011 was supposed to overcome that obstacle by providing the balance sheet support of a mega-vendor.
Dallas-based PrimeLending was one of the few lenders still using Dorado, but recently announced plans to implement a new LOS from Blue Sage Solutions, a New Jersey-based startup founded by Carmine Cacciavillani. The mortgage technology veteran previously founded Palisades Technology Partners, which was acquired by IBM in 2006.
CoreLogic's more recent deals have been focused on the appraisal business. The company acquired a la mode back in April for $120 million, and that followed the 2017 purchase of Mercury Network for $153 million. Before that, it acquired FNC, bought out Wells Fargo's interest in the RELS joint venture and acquired LandSafe Appraisal Services.