The parent company of mortgage servicing rights clearinghouse Marlin Mortgage has struck a deal to acquire 100% of the outstanding equity of direct-to-consumer mortgage lender LoanFront. Terms of the deal were not disclosed and it requires regulatory approval.
In acquiring New Jersey-based LoanFront, private equity-backed Marlin would be absorbing a lender that retains its MSRs and focuses on FHA originations.
LoanFront is licensed to do business in 21 states and offers a mix of conventional and government loans. According to mortgage recruiting platform Modex, about 96% of its transactions were refinancings and the majority were FHA loans. The company was founded in late 2021 and originated about $5.6 million in loans in September.
Over the first nine months of 2022, Marlin, itself founded in 2019, has acquired about $45 billion in mortgage servicing rights.
“The LoanFront acquisition serves a few strategic milestones: adding internal capabilities for retention efforts of the approximate 130,000 existing Marlin borrowers and access to an existing platform to assist in our planned expansion into Ginnie Mae MSR,” Andrew Weber, Marlin’s CEO, said in a statement.
LoanFront’s Steve Stone will stay on to lead the expansion, Weber said.
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“We’ve been impressed with what he and his team have achieved in such a short timeframe. The move demonstrates our ability to expand into a business segment where most are exiting.”
The MSR market is among the few bright spots in the mortgage world in 2022. Over the first nine months of this year, banks have far outstripped nonbanks in buying up MSR packages. Banks have been net purchasers of MSRs, to the tune of $107.8 billion — compared with $51.1 billion for all of 2021, according to a report by mortgage-data analytics firm Recursion.
The Ginnie MSR market, however, is worth closer monitoring. In the FHA program, 30-day loan delinquencies have been ticking up since the beginning of the year. The risk for nonbanks that typically hold Ginnie MSRs is loan defaults, which could cause some cash-flow issues for some Ginnie MSR holders.