Category Archives: Servicing

Private equity firm Thomas H. Lee Partners takes ownership stake in Guaranteed Rate

Back in October, private equity firm Thomas H. Lee Partners acquired a majority interest in Ten-X, the parent company of, but that’s not the only significant investment in the housing industry that the firm is making this year.

The firm is also investing in Guaranteed Rate and taking an ownership stake in the growing retail mortgage lender.

Guaranteed Rate announced the investment on Thursday afternoon.

Under the terms of a definitive agreement between Guaranteed Rate and an affiliate of Thomas H. Lee Partners, THL will make a “material capital and strategic investment” in Guaranteed Rate.

Guaranteed Rate founder Victor Ciardelli will continue to lead the company as CEO and chairman of the board and will continue running day-to-day operations, while THL will have a “meaningful minority stake” in the company.

Financial terms of the deal were not disclosed, so it’s unknown at this time how much money THL is investing in Guaranteed Rate.

Guaranteed Rate said that a portion of the money will used to fund the repurchase of certain shares from the company’s existing shareholders, and the remainder will be used for “general corporate purposes.”

According to Guaranteed Rate, the company will use the funding to “build on its existing origination framework to create a next generation lending platform that further streamlines the mortgage process by enhancing workflow, allowing loan officers to spend less time working on individual files and more time developing relationships and growing the business.”

Additionally, the company plans to make investments in technology, marketing, and recruiting new talent to help the company grow its market share.

The company is currently the sixth largest retail mortgage lender in the country. According to the company, it earned more than $778 million in gross revenue in 2016 and expects to fund over $20 billion in new mortgages in 2017.

Guaranteed Rate also said that it expects to use its “enhanced capital structure” to further develop proprietary products through its private-label securitization and portfolio capabilities.

“We are thrilled to announce our new partnership with THL as we enter another exciting phase of our growth strategy,” Ciardelli said.

“THL has a long history of successfully collaborating with fast-growing companies like Guaranteed Rate, and they also bring the experience, capital and resources that will enhance our capabilities and help us move closer to achieving our ultimate goal of becoming the country’s largest retail mortgage lender,” Ciardelli added.

“THL shares our core values of financial and operational discipline, combined with a culture of inventiveness, self-sufficiency and collaboration,” Ciardell concluded. “We are very excited to begin this journey with them.”

Ganesh Rao, managing director at THL, touted the strength of Guaranteed Rate’s business one of the main reasons the firm invested in the lender.

“Victor and his entire team have built a fantastic company that is centered around a unique and innovative platform, which offers a seamless customer experience and a strong value proposition for consumers, realtors and the company’s loan officers,” Rao said.

“When evaluating different opportunities in the mortgage space, it became clear to us that Guaranteed Rate is well-positioned to thrive and grow market share moving forward, and that it is a great company to partner with in the mortgage market,” Rao continued.

“Guaranteed Rate’s industry leading purchase origination mix, excellent track record of growth and experienced team make this a compelling opportunity for THL,” Rao said. “We look forward to working with Victor and the Guaranteed Rate team to maximize the potential of this business, and to further propel the Company’s continued growth and success in the years ahead.”

The companies said that the deal is subject to customary closing conditions and regulatory approvals and is expected to close in the first quarter of 2018.

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Republicans strike unified deal on tax reform

Late Wednesday, the Congressional committee negotiated the tax reform bill and came to an agreement in principal, with plans to send it back to the Senate once it is officially voted on.

The bill reportedly strikes several compromises between the previous House and Senate legislations, including a compromise on the mortgage interest deduction. 

Earlier this month, the Senate passed a bill to completely overhaul the current tax system. The House passed its tax reform bill back in the middle of November. The two legislative bodies then created a committee to come to an agreement about which tax bill to send to the president’s desk.

While the House tax bill cut the mortgage interest deduction in half, bringing it from $1 million to $500,000, the Senate version left the MID intact. In the newly passed compromise, the mortgage interest deduction is cut to $750,000.

The standard deduction was still doubled from $12,000 to $24,000, in line with the bills in both the House and the Senate. And for some experts, this increase alone was seen as a threat to homeownership as less homeowners would be motivated to itemize with a higher standard deduction.

Several other details that have been released including slashing the corporate tax rate to 21%, and dropping the top tax rate for individuals from 39.6% to 37%. These new rates would take effect next year.

The new bill would also repeal Obamacare’s individual mandate which requires all Americans to have health care or pay a fine.

Once the final details are ironed out in the committee, the bill will be passed to Senate with the hopes of being voted through by Tuesday, then to the House where Congress hopes it will be sent to the president’s desk by Wednesday.

“On the eve of this historic moment for our country, President Trump stood with middle-income families and young people who will benefit from the most comprehensive tax reform legislation in over thirty years,” U.S. Department of the Treasury Secretary Steven Mnuchin said.

“The bill that President Trump will sign into law will restore faith in the American dream by creating a simpler, fairer system that will lead to more economic growth and opportunities for everyone,” Mnuchin said. “Tax reform will not only provide tax cuts for hardworking Americans and their families, it will also make American businesses more competitive so that workers will have access to more, better-paying jobs.”

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CalAtlantic Homes boosts Atlanta presence by acquiring of Home South Communities

CalAtlantic Homes, which is set to be acquired by Lennar in the first quarter of 2018 in a $9.3 billion deal, is doing some acquiring of its own.

CalAtlantic announced this week that it is increasing its footprint in the Atlanta market by acquiring Home South Communities, one of the largest privately held homebuilders in the Atlanta metro market.

The deal brings an additional 970 homesites across 17 communities into the fold for CalAtlantic. According to the company, seven of communities are actively selling now, and the remaining communities are expected to be actively selling at some point in 2018.

As part of the deal, CalAtlantic extended employment offers to Home South Communities employees of who were engaged in the company’s homebuilding business.

“Home South Communities is a well-respected homebuilder in the Atlanta marketplace that shares our core values and commitment to quality craftsmanship,” Casey Hill, Atlanta division president for CalAtlantic Homes, said.

“Adding the designs and geographic diversity of Home South Communities to CalAtlantic’s already strong Atlanta presence will allow us to continue to grow our business while providing an exceptional homeownership opportunity to buyers across the homebuilding spectrum,” Hill added.

Financial terms of the deal were not disclosed.

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