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An uptick in M&A activity is expected in the mortgage industry in ‘26, particularly from CEOs who considered selling during the ‘bad years’ but couldn’t/wouldn’t pull the trigger.
Deal or No Deal? Your ‘26 M&A Crystal Ball 🔮
The time for hemming & hawing is over. Aging mortgage CEOs who struggled through 3 brutal years when deep down they wanted to sell their baby, are primed to pull the trigger in ‘26.
Over the last 3 years, pretty much everyone could say, ‘Sure, we’re losing money but so is everyone else.’ But 85% of lenders made money in Q3, so there’s no excuse that it’s an industry-wide problem anymore, said Brett Ludden, who runs mortgage solutions for Milliman.
“What I anticipate is that you're now going to start to get a clear differentiation of who feels like they can be competitive & who can't.”
The Scoop caught up w/ Ludden for a rundown on ‘26 M&A expectations 👇.
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M&A (Cont.)
Owners who didn't sell during the down years b/c they couldn't control the transaction now have more leverage, Ludden said. “I think you're going to see more transactions where people are choosing to begin their graceful exit & retirement. We've had a couple of deals announced just the last 2 months that I believe probably have some level of that built into them. Because of those [aforementioned] factors, I think you're going to see an ongoing volume of deals, & deals are more likely to be able to get done because the businesses can be profitable now.”
He expects to see a combination of asset deals & stock deals in ‘26. “We have clients that we represent on the sell side that we're in market w/ right now, & there are conversations in different cases that involve asset deals or stock deals. Different buyers have different objectives — it's all about finding the best transaction structure that works for the 2 parties & also gives that seller the highest certainty of the deal closing.”
Will we see more mega-deals from the biggest lenders? Ludden said we’re getting a better understanding of performance in mortgage on a go-forward basis now that we’re through the recessionary cycle. “The larger companies are driven more by financial metrics like return on capital, return on equity, etc, & they're going to be reassessing whether or not in a new normal this is where they want to be investing their money,” he said. “So I would say it wouldn't surprise me at all if you see more strategic transactions.”
Geography matters. One of the broader themes in ‘24 & the beginning of ‘25 was interest in finding production in the South but avoiding the Northeast.
“But what you've seen over the course of the past year is that the Northeast has actually outperformed the South. So whether or not those companies are going to reassess where they are interested in focusing is, I think, an open question mark,” Ludden said. Few want to deal w/ the regulatory headaches of New York & Cali, he noted.
Mat Loves the 50-Year Mortgage 🏀
Most of the mortgage industry has been unimpressed w/ the Trump administration’s recent Mat Ishbia is a fan of the 50-year mortgage. "If the 50-year mortgage came out, it would be a huge program. Especially if you can get the liquidity from Fannie & Freddie & make it so the payment & the math works,” he said on his latest Three Points video. “Because lower payments is always better. It would help housing values, it would also help more people be able to buy houses. It'd be a win across the board...will it come to fruition? Who really knows at this point.”
Rohit’s Got a New Job 🙀
Ut oh. A bunch of Democratic state prosecutors have hired Rohit Chopra to lead a new consumer protection group, Bloomberg reported. Chopra will lead a group that strategizes healthcare, tech & financial services policies & recommend them to states.
The move comes as the Trump administration continues to retreat from financial regulation. “We would normally count on federal regulators to be able to serve as a check on some predatory practice or criminal activity, &now it’s really falling on state attorneys general to serve as a line of defense,” Chopra said in an interview w/ Bloomberg.
Credit Reporting Has Become Like Healthcare 👩⚕
On Monday, I chatted w/ an exec of a mid-sized IMB about credit reporting costs. He wasn’t sure by how much his firm’s costs were going to rise in ‘26, but he expects them to be substantial. We went over the pros/cons of when to start w/ a soft pull to just take a peek, vs. when you reissue & go hard & as well as the variables that will be in play when FICO’s new “direct” model debuts sometime next year. It’s all so freakin’ convoluted.
“It's turning into healthcare pricing,” he said of credit reports. “It's like Obamacare for mortgage."
The Scoop asked executives what they’re seeing from rivals across the space. Some smaller shops are starting to charge borrowers upfront to help defray churn b/c costs have risen so substantially. Others get free soft pulls until the client is under contract & then do a hard pull & charge the client at closing (one East Coast exec said his shop has an 84% pull through from hard pull to closing).
There’s a lot of methods, but my takeaway is that the biggest lenders are seizing on what they view as a strategic advantage that compounds. The Scoop hears that one large IMB (cont.)
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