By acquiring Title365, Covius Services, whose product offerings including title and settlement services primarily on defaults, will be expanding its presence on the origination side, a company executive said.
It complements Covius' existing expertise in providing title services for defaults, Pete Pannes, chief business officer, said.
"Second, there were significant technical integrations that we've been working on at Covius," Pannes continued. "The platform that Title365 operates off of significantly expands and scales our presence; our ability to leverage their integrations moves our technical abilities and integrations more by a number of quarters, it could be as much as two years forward."
What percentage of Title365 is Covius buying
Covius will be purchasing 100% of the company from Blend Labs; the price to be paid is not being disclosed at this time. When Blend purchased Title365 in June 2021
But in February, the holder of that 9.9% interest, which was not named in the first quarter 10-Q, assigned it to Title365 and terminated its stockholder's agreement with Blend.
A unit of what was then called Nationstar,
In May,
Kirby Hulbert, president of Title365, will be moving over to Covius' settlement services team.
What Title365 adds to Covius' existing title business
What Covius currently has on the origination side is a centralized business model, which operates in a narrower band in the marketplace, Pannes explained.
The transaction expands those capabilities, with a plus being Title365 is already integrated with most of the loan origination systems. Trying to replicate that on its own would take a significant amount of time, Pannes added.
This also helps the default title business because Title365 has a number of blue chip clients to whom it can now market Covius' services.
How this deal brings Blend and Covius together
"We now can leverage our existing client base as well as expanding those opportunities to partner with the Blend platform," with that client base, Pannes said.
Besides the opportunity to expand Covius' services business, "it allows Blend to continue what they do well, which is provide software related services to their platform clients," he added.
In its first quarter results, Blend moved Title365 into its discontinued operations line. It reported a net loss of $2.8 million from discontinued operations and an overall net loss of $9.4 million.
Blend's business model going forward
Blend has decided it wanted to have a more focused company, something it has been calling "Simplify Blend" on its earnings call, CEO Nima Ghamsari said.
"We're going to be a pure software company, building the best technology," Ghamsari said. "That's really what our differentiator has been from the get go."
The aim is to help their lender customers thrive, do more loans, save money and allow the consumers to have a better experience. This sale helps Blend to refocus on that as a company.
"A lot of that is driven by the market," Ghamsari noted. "The market doing what it has, has forced everyone in the industry, not just Blend, to really prioritize."
Companies are increasingly evaluating their core strengths and unique offerings and for Blend, that lies in its technology and software, he added.
Blend's new partnership approach
What hasn't changed is the opportunity to improve the home lending experience through title insurance. Blend is actively developing solutions in this space, with Covius among several partners supporting its efforts.
"We still believe in the technology side of this, which was always the intent," Ghamsari said. "Now we're just going to execute on just that portion and have more of a partnership approach, just like we do
While high interest
"It's really cleaned up a lot of the fluff that existed at companies like Blend and other tech companies and within the industry," he said, "It's been a helpful exercise for us."
