Discover to Buy LendingTree Loans for Almost $56MM
Discover Financial Services is buying the assets of Tree.com Inc.'s mortgage origination subsidiary, Home Loan Center, for $55.9 million.
Home Loan Center, which operates as LendingTree Loans, originates and processes consumer mortgage loans. It closed $2.8 billion in refinance and purchase mortgages in 2010, according to Tree.com.
Discover, primarily a credit card lender and transaction processor, said Thursday that it plans to originate consumer mortgages it will sell in the secondary markets, something it has expressed aspirations of doing in the past.
"Discover is acquiring a proven operating platform that we can scale by leveraging our brand and lending expertise," Carlos Minetti, the president of consumer banking and operations for the Riverwoods, Ill., company, said in a press release.
The acquisition, which Discover expects to close by the end of the year, could have a "nominal impact" on the company's 2012 earnings, it said.
Discover has been making a bigger push to expand beyond the traditional credit cards it issues directly to consumers.
In February it said it was buying about $1.1 billion in consumer deposits from the insurer Allstate Corp. and would market its own deposit account products through Allstate's agents. In December, it closed its $600 million purchase of Student Loan Corp., which was majority owned by Citigroup Inc., to bolster its student lending business.
The mortgage business is not entirely new territory for Discover. In 2004, while owned by Morgan Stanley, its Discover Bank subsidiary partnered with a unit of JPMorgan Chase & Co. to provide loan origination services to some Delaware residents.
Tree.com is the parent of LendingTree LLC and was formerly owned by IAC/InterActiveCorp, which acquired it in 2003. IAC spun off Tree.com into a separate public company in 2008.
In an earnings press release on Thursday, Tree.com Chairman and Chief Executive Officer Doug Lebda said the sale is part of its efforts to get "back to our roots as a lead generation company across multiple verticals."