Mortgage Verifier Acquires Key Fintech within the Self Employed Market

Mortgage review company LoanLogics has bought LoanBeam, a company approved by large government-affiliated investors to help process and calculate self-employment income that is used for underwriting.

Private equity firm Sun Capital Partners bought LoanLogics earlier this year as one of its first investments in a new technology industry, and the subsequent purchase of LoanBeam is the result of that collaboration, according to a press release. Neither private company involved in either transaction has disclosed the financial terms, but Bill Neville, CEO of LoanLogics, was ready to discuss some of the circumstances that led to the LoanBeam deal.

“Since our takeover in July, we have been actively looking for suitable companies. We looked at a few and didn't find anything that met our criteria [until we became aware of LoanBeam], he said in an interview. "We do similar work, not for income [like LoanBeam does], but we take credit files, target certain fields there, and then run rules against them, so there is a meaningful synergy there."

Bill Neville from LoanLogics

LoanBeam stood out as an acquisition target, among other things, because it was a pioneer in its niche and automated the calculation of income data for the self-employed from tax documents. Approval has been given by two of the largest government-affiliated investors in the US mortgage market.

“It's not an easy job. How do you collect the data from the tax returns, how do you put it into the correct categories, and then follow the standards of the GSEs? How to organize all of this to understand what income is can be tricky, "said Les Parker, managing director at Transformational Mortgage Solutions consulting firm and former senior vice president at LoanLogics. “Every time you step away from the W-2 staff, it gets complicated. That is why many lenders want to serve only wage earners as far as possible. "

About 10% of all loans are given to self-employed borrowers, which could limit the reach of LoanBeam. However, it is also expanding its offering to include automation that processes calculations for wage documentation. Joining LoanLogics will be part of an operation that looks for opportunities for expansion that could come through further acquisitions as the company finds more that suits its needs or organic growth, Neville said.

Joining a growing company like LoanLogics could give LoanBeam the boost it needs to become more competitive as other companies like CoreLogic are approved by the GSEs to offer income automation to the self-employed.

"LoanBeam really had a lock on tax returns, but I think they were in danger of being overtaken," said Bill Corbet, president of Triple Crossing Consulting and former senior vice president of Citizens Bank. "Well, I don't think that – knowing LoanLogics' position on things – they're going to let them fall behind, and for LoanLogics, introducing LoanBeam really fits their strategy."

Neville declined to comment on how integrating the two companies' businesses might affect staffing or offices, but generally pointed out that while there are similarities between the functions of the two companies, there are not many Layoffs there.

"You are a partner in a GSE, and so are we, but in a completely different area," he said, referring to LoanLogics' automation of the process by which lenders grant loan payment cash flow rights to a. separate investor can sell while simultaneously delivering a mortgage to Freddie Mac. "Our tech teams speak the same language and we have some overlapping customers, but also some who are not LoanBeam customers and vice versa, so there are opportunities to build relationships there."

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