Mortgage.com Expands B2B Base With Acquisitions

Online mortgage lender mortgage.com (Nasdaq: XDCM) announced today that it has agreed to acquire three subsidiaries of a North Carolina holding company, significantly expanding its network of purchase-money mortgage lending in the business-to-business sector.

The Plantation, Florida-based company said it will acquire Capital Savings Co., Inc., a technology-based lender with over $300 million (US$) in mortgages last year, ACM/USA, Inc., a company that partners with home builders and real estate companies to set up mortgages, and PlanMax Financial, a company that creates individual Web pages for financial planners, insurance agents and CPAs.

Mortgage.com said that some 80 percent of its business last year was through purchase-money mortgages — products offered to homebuilders, realtors and financial planners.

“These acquisitions fit into mortgage.com’s strategy of using the Internet not just directly with consumers but also in a business-to-business fashion with all key participants in the home-buying process,” said mortgage.com CEO Seth Werner. “These companies will increase our geographic diversity and extend out point-of-sale reach to the front lines of home buying.”

Online Mortgage Market Build-Up

The online mortgage business has been increasingly active in recent weeks. With an estimated $250 billion in online mortgage business predicted by Deutsche Bank by the year 2003 — nearly one-quarter of all U.S. mortgage loans — the stakes are high.

Just last week, Intuit agreed to buy Michigan-based Rock Financial for $370 million in stock. The company will fold it in with its QuickenMortgage business.

E-Loan announced the same day that it received $26 million to open a mortgage-lending foray into Europe.

Mortgage.com — which was founded in 1994 — said it originates some $3 billion in loans annually. The company reported second-quarter revenues of $14.3 million and a net loss of $8.6 million. It closed some 4,500 loans for the quarter, with a cumulative principal amount of nearly $850 million.

The company recently announced that it was teaming up with Prudential Real Estate Affiliates, Inc. and Chase Manhattan Mortgage Corp. to offer Internet point-of-sale technology to Prudential affiliate offices nationwide.

Its business-to-business customer list includes Intuit, GE Capital Mortgage, Fleet Bank, First Union Bank, Prudential, Cendant, Fannie Mae and [email protected] The company says it reduces the cost of mortgage origination and funding by supplying homebuilders, realtors and financial planners with business management, loan processing and call center and mortgage funding capabilities.

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