10 months ago
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Rapidly expanding Cleveland, Ohio-based CrossCountry Mortgage (CCM) has struck a deal to acquire the smaller retail mortgage lender AmCap Home Loans and bolster its operations in Texas.
In an exclusive interview with HousingWire, Ron Leonhardt, a former mortgage broker who founded CCM in 2003, confirmed conversations with the parties started years ago, although the transaction closed on Tuesday.
Leonhardt first met Garrett Clayton, AmCap’s CEO, about a decade ago. They hit it off.
“We’ve always talked about working together. We had been talking about this off and on for probably two or three years. It just was the right time,” Leonhardt told HousingWire.
Terms of the acquisition, including financial information, were not disclosed.
In December, the National Multistate Licensing System (NMLS) showed that AmCap had more than 400 sponsored loan officers while CCM had over 4,000. As of Jan. 10, AmCap had only 43 sponsored LOs due to some having already transitioned to CCM. As a result, CCM had 4,200 in total, per NMLS.
Leonhardt said that AmCap employees will participate in a two-week training program at CCM, with the integration expected to be complete in 45 to 60 days. AmCap will become a division of CCM, and Clayton will have a leadership role within the company.
“I am very proud of what we built at AmCap over the years, but I fully recognize what got us here wasn’t going to get us to where we ultimately wanted to be as a business unit,” Clayton said in a statement.
In terms of volume, CCM claims it originated $31.6 billion in loans in 2023.
AmCap, founded in 2002, is a much smaller lender. Mortgage tech platform Modex shows that it produced about $2 billion in mortgage loans over the last 12 months that ended in November, about half conventional loans, 32% Federal Housing Administration loans and 13.5% Department of Veteran Affairs loans. In total, 78% were purchase loans.
Everything’s bigger in Texas
Although smaller, AmCap fits CCM’s goal to expand geographically through mergers and acquisitions. However, the lender’s primary strategy remains to grow organically by hiring LOs nationwide.
“Our basic strategy for growth has always been organically, getting into markets one by one. But recently, I’d say since maybe 2018, we’ve done six or seven of these [M&A deals] –LendUS was the biggest of them all,” Leonhardt said.
In April 2022, HousingWire reported that CCM acquired LendUS, which had originated $7 billion in 2021 through 350 loan officers and roughly 100 retail branches.
The AmCap deal helps CCM to have “instant penetration” in Texas, which is “one of the best opportunities” for the company because “it’s one of the largest states, where construction is robust,” Leonhardt said.
Leonhardt claims CCM is number one in seven of the top 10 states in distributed retail. Texas isn’t one of them, but the acquisition of AmCap puts the company in position to get there. He said that AmCap helps mainly with the Houston market.
One source familiar with CCM operations told HousingWire anonymously, for fear of retaliation, that around 5% of CCM mortgage volume comes from Texas, which matches with Modex data on “property states” for the company.
In November, the source added that CCM originated about 340 units and $112 million in mortgage volume in the state.
Potential future targets
Leonhardt, who rarely speaks to the media, said the M&A targets are companies with a cultural fit and business alignment; the lender does not do wholesale or joint ventures and sticks to distributed retail, for example.
“Now and then, something will pop up. It’s not like I’m putting out outbound calls. Anytime we’re doing a deal, it’s been brought to me,” Leonhardt said. “And again, you might have to look at 10-15 companies before one makes sense.”
Leonhardt, who claims privately-held CCM is profitable, said it makes sense for the company to acquire lenders between $1 billion and $2 billion in volume, but there’s “no top or limit on that.”
The CMM founder said the benefits for targets to join CCM are to reduce their costs and have access to over 100 products. The company says it has over 7,000 employees and operates nearly 800 branches.
“We improved this company more in the last 24 months than in the last six years. We took the opportunity to regroup and invest back in the business at a down mark. I’ve done this every single time and it’s worked every time,” Leonhardt told HousingWire.
Leonhardt, who has frequent exploratory M&A conversations with executives at other rival lenders, said that what makes a deal come to fruition, simply put, is “the advantages of putting companies together.”
“For us, it’s going to be products, technology, operations, and cost structure (…) There’s not anything I won’t look at.”
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