Mortgage M&A is entering a new phase as founders age out, capital becomes more disciplined 🏋️, & lenders prioritize stability over splash.

The deal mix is moving away from the asset purchases that dominated The Bad Years™ (‘22–’24) & toward stock transactions & mergers. This shift is happening because CEOs want to preserve operating continuity & reduce LO churn, said Milliman M&A advisor Brett Ludden.

“CEOs are getting older, they don't naturally have the transition path of the heir apparent 🫅 taking over,” he said. “It's always been their company. I think they're feeling like the mortgage industry hasn’t recovered enough” to sell via an asset deal. “They're much more interested in doing that as a stock transaction.”

In asset deals, lenders can lose up to 40% of LOs. But in a stock sale, an ownership change can allow for a new strategy w/o rocking the boat 🚢.

“You theoretically don’t even need to tell people,” he noted. “You can have an ownership change, & you may bolt on a new strategy. And nothing ever happens to the sales team. They just hear that the company's investing in a new growth channel.” 

Asset deals remain possible, but often depend on unusually high trust between CEOs, Ludden said. 

Getting M&A right is less about locking up LOs to expensive new contracts & more about presenting a smart transition plan & identifying who absolutely has to stay (key influencers are sometimes underwriters or processors).

Larry Silver, who runs Mortgage Career Exchange, expects private equity to continue to take positions in IMBs but warns that many shops overestimate what they’re selling. “What is their value proposition? They don't control the inventory, which is the house. They're selling their systems, which are usually cobbled together by other technology. They're selling their people, but you can only handcuff 👮them away for so long. So I think there's a mis-evaluation of the value of their organizations."

Ludden expects the next 12 months 📅 to resemble the last 12 (assuming rates don’t drop massively): selective growth, more conversations about M&A, & continued discipline on expense — with recruiting & retention as the competitive lever. 

“The biggest metric in this industry is: How many bps of profit did you make according to MBAs quarterly profit index? It's not, ‘How much capital did you have to have sitting there in order to make 14 bps?’” 

Business decisions should be driven by metrics like return on capital or return on assets “but that isn't how most of the leaders in this industry operate," he said. Ludden expects more strategic investments that can help them take chips off the table while enabling additional growth opportunities.

While most retirement-ready CEOs are simply looking for a good dance partner, there are also strategic shifts happening at the top of the heap.

Rocket Companies this summer closed on Redfin ($1.75B) & should pick up Mr. Cooper ($9.4B) before year’s end, giving them scary funnel potential. Mega-servicer Bayview is taking Guild ($1.4B) private & Lower acquired Movoto and Neat Labs (prices undisclosed). Those deals are clearly strategic, & according to Ludden, signal a potential industry move toward the LO being “less of a strategic finder & more of a facilitator of communicating interest rates & education, with the vision down the road being, ‘Maybe you don’t actually need to have a loan originator anyway. You can just automate the entire process.’”

Elsewhere in the M&A landscape, sources told The Mortgage Scoop that Fairway has been working on an acquisition deal (IMF also reported this a few weeks ago). And Rithm Capital, which has decided not to spin off NewRez, could be a player in non-QM dealmaking.

Rumors that Zillow & loanDepot could hook up aren’t whispered anymore, but many still expect some kind of LD M&A activity at some point. Old heads may recall that Anthony Hsieh hopped on a Zoom call with CrossCountry’s Ron Leonhardt in 2021 and proposed a merger. Leonhardt would have run a combined company. Ron said no 🙅.

Movement Mortgage is another lender that is often in the rumor mill. Owner Casey Crawford last year put Steve Smith, a sharp ops guy, in charge. Smith has a history of joining companies that later get sold (Stearns, Caliber). If Crawford were looking for a strategic investor, he’d have to find a partner comfortable w/ its unusual setup: roughly 1/2 the company is a Christian charity. Movement has lost production over the last year (15% of producing LOs), the net branch strategy didn’t pan out and they’ve sold a lot of servicing, sources said. “They don’t have anything sexy on product, marketing, or technology, and they’ve had too many cycles of people in and out,” said one rival IMB exec. “The culture shtick only goes so far.”

On the mortgage tech side, sources said Constellation Software’s Perseus Group is eyeing deals and ICE Mortgage Technology is always looking for companies that fit its strategy (and they recently picked up Snapflood, as The Scoop exclusively reported).

“It's funny, because everybody I meet right now is like, ’How do I get bought by ICE?’” said one solutions company executive. “Because they're the only ones making acquisitions.”

“Just had 2 clients apply over the past 30 minutes that are ready to pull the trigger,” Union Home Mortgage’s Ravi Patel told The Scoop on Sunday afternoon. The Cincinnati-based LO reported having more than 20 conversations w/ clients this weekend, mostly providing updates on the market and advice on when to lock.

“The goal is to not refinance too soon, but anyone above a 6.99% rate is ecstatic about where rates are headed,” he said. “Updating buyers and providing them with more purchase power has been a bigger talking point than a lot of LOs aren’t doing.” 

“Friday was very interesting,” added Clear2Close President Mike Ninomiya. “Lots of phone calls from LOs on rates, & what we can do to offer attractive refi options. Definitely a lot of buzz all day Friday, which was very welcome since new submissions have been sluggish after back to school.” 

Some clients moved forward w/ refis & others are waiting for rates to drop further, he said. Clear2Close also locked some 7-year ARMs on Friday, a trend that is “picking up steam,” he said. LOs also reported a surge in purchase interest. 

“Overall, we will most likely have a nice submission week this week based off lock request submissions,” Ninomiya said.

Jeff Anderson, a broker in CA, said it’s giving him deja vu. “What if today is the right day to lock in a rate? Those who locked ahead of the Fed last September were smart.”

On Friday, Reuters reported that Bill Pulte’s mom & stepdad appear to have done the very thing 😣he and Trump are targeting Letitia James and Lisa Cook over. Reuters says that Pulte’s mom and stepfather had simultaneously requested “homestead exemptions”—a discount on property taxes for a primary residence—on 2 different properties, 1 in Michigan and 1 in 🌴Florida. After being asked about the Pultes’ situation, local tax officials quickly revoked the exemption on the Michigan house. That report came on the heels of a ProPublica story that revealed 3 different members of Trump’s cabinet appear to have simultaneously claimed multiple properties as a primary.

And get a load of this: At a private dinner attended by Trump World 🌎 people last week, Treasury Secretary Scott Bessent at one point threatened to punch Bill Pulte "in the fucking face," according to Politico. Pulte was reportedly “badmouthing” him to Trump, & Bessent let him have it. “Why the fuck are you talking to the president about me? Fuck you,” Bessent told Pulte. “I’m gonna punch you in your fucking face.”

Pulte was reportedly stunned & club co-owner & Fannie board member Omeed Malik intervened. Bessent wanted Pulte to be booted, Politico reported. “It’s either me or him,” Bessent said to Malik. “You tell me who’s getting the fuck out of here.”

“Or,” he added, “we could go outside.”

“To do what?” asked Pulte. “To talk?”

“No,” Bessent replied. “I’m going to fucking beat your ass.”

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